One simple way to benefit from a rising market is to buy an index fund. But in any given year a good portion of stocks will fall short of that. For example, that’s what happened with Caltagirone Editore SpA (BIT:CED) over the last year – it’s share price is down 32% versus a market return of -28%. At least the damage isn’t so bad if you look at the last three years, since the stock is down 5.2% in that time. Furthermore, it’s down 31% in about a quarter. That’s not much fun for holders. But this could be related to the weak market, which is down 35% in the same period.
See our latest analysis for Caltagirone Editore
Given that Caltagirone Editore didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Caltagirone Editore’s revenue didn’t grow at all in the last year. In fact, it fell 4.8%. That’s not what investors generally want to see. The stock price has languished lately, falling 32% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. We think most holders must believe revenue growth will improve, or else costs will decline.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
BIT:CED Income Statement, March 13th 2020
Take a more thorough look at Caltagirone Editore’s financial health with this free report on its balance sheet.
A Different Perspective
We regret to report that Caltagirone Editore shareholders are down 32% for the year. Unfortunately, that’s worse than the broader market decline of 28%. Having said that, it’s inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 5.3% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we’ve identified 4 warning signs for Caltagirone Editore that you should be aware of.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IT exchanges.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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.
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. Thank you for reading.