- Oops!Something went wrong.Please try again later.
Investing in stocks inevitably means buying into some companies that perform poorly. Long term Azure Minerals Limited (ASX:AZS) shareholders know that all too well, since the share price is down considerably over three years. Regrettably, they have had to cope with a 59% drop in the share price over that period. On the other hand the share price has bounced 7.7% over the last week.
With just AU$85,748 worth of revenue in twelve months, we don't think the market considers Azure Minerals to have proven its business plan. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Azure Minerals will find or develop a valuable new mine before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Azure Minerals has already given some investors a taste of the bitter losses that high risk investing can cause.
Our data indicates that Azure Minerals had AU$250k more in total liabilities than it had cash, when it last reported in June 2019. That puts it in the highest risk category, according to our analysis. But with the share price diving 26% per year, over 3 years , it's probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Azure Minerals's cash levels have changed over time. You can see in the image below, how Azure Minerals's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
Investors in Azure Minerals had a tough year, with a total loss of 9.7%, against a market gain of about 20%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. However, the loss over the last year isn't as bad as the 14% per annum loss investors have suffered over the last half decade. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. It's always interesting to track share price performance over the longer term. But to understand Azure Minerals better, we need to consider many other factors. Case in point: We've spotted 7 warning signs for Azure Minerals you should be aware of, and 3 of them shouldn't be ignored.
Of course Azure Minerals may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.