Oxford BioDynamics Plc (LON:OBD) shareholders should be happy to see the share price up 23% in the last quarter. But that is minimal compensation for the share price under-performance over the last year. In fact the stock is down 44% in the last year, well below the market return.
Because Oxford BioDynamics is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Oxford BioDynamics saw its revenue grow by 1.2%. While that may seem decent it isn't great considering the company is still making a loss. Given this lacklustre revenue growth, the share price drop of 44% seems pretty appropriate. It's important not to lose sight of the fact that profitless companies must grow. But if you buy a loss making company then you could become a loss making investor.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Oxford BioDynamics's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Over the last year, Oxford BioDynamics shareholders took a loss of 44%. In contrast the market gained about 9.0%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 11% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Before spending more time on Oxford BioDynamics it might be wise to click here to see if insiders have been buying or selling shares.
But note: Oxford BioDynamics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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