Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Envision Solar International, Inc. (NASDAQ:EVSI) share price slid 43% over twelve months. That's well bellow the market return of 1.7%. Notably, shareholders had a tough run over the longer term, too, with a drop of 31% in the last three years. On top of that, the share price is down 5.8% in the last week. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
Envision Solar International isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Envision Solar International saw its revenue grow by 24%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 43%. You might even wonder if the share price was previously over-hyped. However, that's in the past now, and it's the future that matters most.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So it makes a lot of sense to check out what analysts think Envision Solar International will earn in the future (free profit forecasts).
A Different Perspective
While the broader market gained around 1.7% in the last year, Envision Solar International shareholders lost 43%. 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 7.7% 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 Envision Solar International's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you are like me, then you will 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 US exchanges.
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