Over the last month the Netshoes (Cayman) Limited (NYSE:NETS) has been much stronger than before, rebounding by 50%. But that isn't much consolation to those who have suffered through the declines of the last year. During that time the share price has sank like a stone, descending 60%. Some might say the recent bounce is to be expected after such a bad drop. Arguably, the fall was overdone.
Netshoes (Cayman) 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year Netshoes (Cayman) saw its revenue grow by 1.6%. That's not a very high growth rate considering it doesn't make profits. It's likely this muted growth has contributed to the share price decline of 60% in the last year. We'd want to see evidence that future revenue growth will be stronger before getting too interested. Of course, the market can be too impatient at times. Why not take a closer look at this one so you're ready to pounce if growth does accelerate.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
If you are thinking of buying or selling Netshoes (Cayman) stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Given that the market gained 8.2% in the last year, Netshoes (Cayman) shareholders might be miffed that they lost 60%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Putting aside the last twelve months, it's good to see the share price has rebounded by 13%, in the last ninety days. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
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 US exchanges.
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