If you love investing in stocks you're bound to buy some losers. But long term Windar Photonics PLC (LON:WPHO) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 57% share price collapse, in that time. The more recent news is of little comfort, with the share price down 52% in a year. The falls have accelerated recently, with the share price down 39% in the last three months.
Windar Photonics isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
Over three years, Windar Photonics grew revenue at 38% per year. That is faster than most pre-profit companies. In contrast, the share price is down 25% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
This free interactive report on Windar Photonics's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Over the last year, Windar Photonics shareholders took a loss of 52%. In contrast the market gained about 5.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 25% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. You could get a better understanding of Windar Photonics's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
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 GB exchanges.
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