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Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that Vadivarhe Speciality Chemicals Limited (NSE:VSCL) stock has had a really bad year. The share price has slid 70% in that time. We wouldn't rush to judgement on Vadivarhe Speciality Chemicals because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 41% in the last 90 days.
We don't think that Vadivarhe Speciality Chemicals's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last twelve months, Vadivarhe Speciality Chemicals increased its revenue by 27%. We think that is pretty nice growth. Meanwhile, the share price tanked 70%, 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 below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Vadivarhe Speciality Chemicals's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We doubt Vadivarhe Speciality Chemicals shareholders are happy with the loss of 70% over twelve months. That falls short of the market, which lost 1.5%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 41%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. If you would like to research Vadivarhe Speciality Chemicals in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
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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.