Some IEX Group (AMS:IEX) Shareholders Are Down 25%
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by IEX Group N.V. (AMS:IEX) shareholders over the last year, as the share price declined 25%. That falls noticeably short of the market return of around 6.6%. Zooming out, the stock is down 23% in the last three years. Furthermore, it's down 20% in about a quarter. That's not much fun for holders.
View our latest analysis for IEX Group
Because IEX Group is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
IEX Group grew its revenue by 33% over the last year. That's definitely a respectable growth rate. Meanwhile, the share price is down 25% over twelve months, which is disappointing given the progress made. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of IEX Group's earnings, revenue and cash flow.
A Different Perspective
IEX Group shareholders are down 25% for the year, but the broader market is up 6.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 8.5% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. You could get a better understanding of IEX Group's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NL 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 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. Thank you for reading.
