Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So spare a thought for the long term shareholders of TransEnterix, Inc. (NYSEMKT:TRXC); the share price is down a whopping 88% in the last twelve months. That'd be enough to make even the strongest stomachs churn. To make matters worse, the returns over three years have also been really disappointing (the share price is 54% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 48% in the last 90 days.
We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Because TransEnterix is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 twelve months, TransEnterix increased its revenue by 27%. We think that is pretty nice growth. However, it seems like the market wanted more, since the share price is down 88%. One fear might be that the company might be losing too much money and will need to raise more. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on TransEnterix's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in TransEnterix had a tough year, with a total loss of 88%, against a market gain of about 4.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 31% per year over five years. 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course TransEnterix may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.