Seafarms Group Limited (ASX:SFG) shareholders will doubtless be very grateful to see the share price up 45% in the last month. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 40% in a year, falling short of the returns you could get by investing in an index fund.
Check out our latest analysis for Seafarms Group
Given that Seafarms Group 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last twelve months, Seafarms Group increased its revenue by 2.0%. 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 40% in a year. In a hot market it’s easy to forget growth is the life-blood of a loss making company. So remember, if you buy a profitless company then you risk being a profitless investor.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
ASX:SFG Income Statement May 5th 2020
Take a more thorough look at Seafarms Group’s financial health with this free report on its balance sheet.
A Different Perspective
We regret to report that Seafarms Group shareholders are down 40% for the year. Unfortunately, that’s worse than the broader market decline of 13%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 4.3% per year over five years. We realise that Baron Rothschild 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 business. It’s always interesting to track share price performance over the longer term. But to understand Seafarms Group better, we need to consider many other factors. For instance, we’ve identified 5 warning signs for Seafarms Group (1 can’t be ignored) that you should be aware of.
Of course Seafarms Group 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 AU exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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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