This month, we saw the Itafos (CVE:IFOS) up an impressive 95%. But the last three years have seen a terrible decline. The share price has sunk like a leaky ship, down 79% in that time. So it sure is nice to see a bit of an improvement. Of course the real question is whether the business can sustain a turnaround.
View our latest analysis for Itafos
Given that Itafos 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. 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.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
TSXV:IFOS Income Statement March 31st 2020
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
Itafos shareholders are down 47% for the year, falling short of the market return. Meanwhile, the broader market slid about 22%, likely weighing on the stock. Shareholders have lost 41% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. Take risks, for example – Itafos has 3 warning signs (and 1 which is significant) we think you should know about.
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 CA exchanges.
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