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Imagine Owning AeroCentury (NYSEMKT:ACY) While The Price Tanked 55%

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  • ACY

Taking the occasional loss comes part and parcel with investing on the stock market. And unfortunately for AeroCentury Corp. (NYSEMKT:ACY) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 55% in that time. Even if you look out three years, the returns are still disappointing, with the share price down55% in that time. Furthermore, it's down 30% in about a quarter. That's not much fun for holders.

Check out our latest analysis for AeroCentury

AeroCentury 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

AeroCentury grew its revenue by 38% over the last year. We think that is pretty nice growth. Meanwhile, the share price tanked 55%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

AMEX:ACY Income Statement, January 31st 2020
AMEX:ACY Income Statement, January 31st 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Investors in AeroCentury had a tough year, with a total loss of 55%, against a market gain of about 22%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality business. 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 AeroCentury is showing 4 warning signs in our investment analysis , and 3 of those are significant...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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.

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.