Generally speaking long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. To wit, the Creative Eye Limited (NSE:CREATIVEYE) share price managed to fall 69% over five long years. We certainly feel for shareholders who bought near the top. And some of the more recent buyers are probably worried, too, with the stock falling 49% in the last year. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.
Given that Creative Eye 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last half decade, Creative Eye saw its revenue increase by 15% per year. That's well above most other pre-profit companies. Unfortunately for shareholders the share price has dropped 21% per year - disappointing considering the growth. It's safe to say investor expectations are more grounded now. Given the revenue growth we'd consider the stock to be quite an interesting prospect if the company has a clear path to profitability.
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 Creative Eye's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Creative Eye shareholders are down 49% for the year, but the market itself is up 4.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 21% over the last half decade. 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 businesses. You could get a better understanding of Creative Eye's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
But note: Creative Eye 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 IN 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.