Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Spare a thought for those who held The Stanley Gibbons Group plc (LON:SGI) for five whole years - as the share price tanked 99%. And it's not just long term holders hurting, because the stock is down 39% in the last year. Contrary to the longer term story, the last month has been good for stockholders, with a share price gain of 9.5%.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Because Stanley Gibbons Group 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over half a decade Stanley Gibbons Group reduced its trailing twelve month revenue by 31% for each year. That puts it in an unattractive cohort, to put it mildly. So it's not altogether surprising to see the share price down 61% per year in the same time period. We don't think this is a particularly promising picture. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling Stanley Gibbons Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Investors in Stanley Gibbons Group had a tough year, with a total loss of 39%, against a market gain of about 6.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 61% doled out over the last five years. We'd need to see some sustained improvements in the key metrics before we could muster much enthusiasm. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.