The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Solution Financial Inc. (CVE:SFI) have tasted that bitter downside in the last year, as the share price dropped 11%. That falls noticeably short of the market return of around 5.2%. Because Solution Financial hasn't been listed for many years, the market is still learning about how the business performs. Unfortunately the share price momentum is still quite negative, with prices down 9.3% in thirty days. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
While Solution Financial made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last twelve months, Solution Financial increased its revenue by 16%. We think that is pretty nice growth. Unfortunately that wasn't good enough to stop the share price dropping 11%. This implies the market was expecting better growth. However, that's in the past now, and it's the future that matters most.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Solution Financial stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While Solution Financial shareholders are down 10% for the year (even including dividends) , the market itself is up 5.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 6.8% 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. Before spending more time on Solution Financial it might be wise to click here to see if insiders have been buying or selling shares.
We will like Solution Financial better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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.