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. For example, the Unibap AB (publ) (STO:UNIBAP) share price is down 15% in the last year. That’s disappointing when you consider the market returned -11%. Because Unibap hasn’t been listed for many years, the market is still learning about how the business performs. It’s down 27% in about a month. We do note, however, that the broader market is down 29% in that period, and this may have weighed on the share price.
See our latest analysis for Unibap
Given that Unibap 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 it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Unibap grew its revenue by 2.7% over the last year. While that may seem decent it isn’t great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it’s not particularly surprising to see the stock down 15% in a year. It’s important not to lose sight of the fact that profitless companies must grow. But if you buy a loss making company then you could become a loss making investor.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
Unibap shareholders are down 15% for the year, even worse than the market loss of 11%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. It’s worth noting that the last three months did the real damage, with a 25% decline. So it seems like some holders have been dumping the stock of late – and that’s not bullish. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 6 warning signs we’ve spotted with Unibap (including 1 which is makes us a bit uncomfortable) .
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 SE 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.
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