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Reflecting on VIVO Cannabis' (TSE:VIVO) Share Price Returns Over The Last Three Years

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It is a pleasure to report that the VIVO Cannabis Inc. (TSE:VIVO) is up 104% in the last quarter. But that is meagre solace in the face of the shocking decline over three years. The share price has sunk like a leaky ship, down 90% in that time. So it's about time shareholders saw some gains. Only time will tell if the company can sustain the turnaround.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

See our latest analysis for VIVO Cannabis

VIVO Cannabis isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. 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.

In the last three years, VIVO Cannabis saw its revenue grow by 83% per year, compound. That is faster than most pre-profit companies. So why has the share priced crashed 24% per year, in the same time? You'd want to take a close look at the balance sheet, as well as the losses. Ultimately, revenue growth doesn't amount to much if the business can't scale well. Unless the balance sheet is strong, the company might have to raise capital.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting that the CEO is paid less than the median at similar sized 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. It might be well worthwhile taking a look at our free report on VIVO Cannabis' earnings, revenue and cash flow.

A Different Perspective

Over the last year, VIVO Cannabis shareholders took a loss of 3.5%. In contrast the market gained about 7.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, the longer term story isn't pretty, with investment losses running at 24% per year over three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. It's always interesting to track share price performance over the longer term. But to understand VIVO Cannabis better, we need to consider many other factors. Take risks, for example - VIVO Cannabis has 5 warning signs (and 2 which make us uncomfortable) we think you should know about.

We will like VIVO Cannabis 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.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.