The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it’s not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Nerds on Site Inc. (CSE:NERD) shareholder over the last year, since the stock price plummeted 86% in that time. That’d be enough to make even the strongest stomachs churn. Nerds on Site hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 30% in the last three months. Of course, this share price action may well have been influenced by the 20% decline in the broader market, throughout the period.
We really feel for shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind there’s more to life than money, anyway.
Check out our latest analysis for Nerds on Site
Given that Nerds on Site 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Nerds on Site grew its revenue by 19% over the last year. We think that is pretty nice growth. However, it seems like the market wanted more, since the share price is down 86%. One fear might be that the company might be losing too much money and will need to raise more. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
CNSX:NERD Income Statement April 14th 2020
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized 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. This free interactive report on Nerds on Site’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Nerds on Site shareholders are down 86% for the year, even worse than the market loss of 16%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 30% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. 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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 6 warning signs with Nerds on Site (at least 3 which can’t be ignored) , and understanding them should be part of your investment process.
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 CA exchanges.
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