If You Had Bought Emerson Radio (NYSEMKT:MSN) Stock A Year Ago, You'd Be Sitting On A 36% Loss, Today
Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Emerson Radio Corp. (NYSEMKT:MSN) shareholders over the last year, as the share price declined 36%. That contrasts poorly with the market return of 22%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 25% in three years.
See our latest analysis for Emerson Radio
Emerson Radio wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Emerson Radio's revenue didn't grow at all in the last year. In fact, it fell 41%. That looks pretty grim, at a glance. The stock price has languished lately, falling 36% in a year. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Emerson Radio stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Emerson Radio shareholders are down 36% for the year, but the market itself is up 22%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8.4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Be aware that Emerson Radio is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...
Of course Emerson Radio 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 US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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