This week we saw the The Flowr Corporation (CVE:FLWR) share price climb by 22%. But that isn't much consolation for the painful drop we've seen in the last year. Specifically, the stock price nose-dived 92% in that time. So it's not that amazing to see a bit of a bounce. The bigger issue is whether the company can sustain the momentum in the long term.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
Given that Flowr didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Flowr
A Different Perspective
Flowr shareholders are down 92% for the year, even worse than the market loss of 28%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 72% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Flowr (at least 2 which don't sit too well with us) , and understanding them should be part of your investment process.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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.
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