December 3, 2021

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The CPPGroup (LON:CPP) Share Price Is Down 69% So Some Shareholders Are Wishing They Sold

The truth is that if you invest for long enough, you’re going to end up with some losing stocks. But long term CPPGroup Plc (LON:CPP) shareholders have had a particularly rough ride in the last three year. Regrettably, they have had to cope with a 69% drop in the share price over that period. And the ride hasn’t got any smoother in recent times over the last year, with the price 35% lower in that time. And the share price decline continued over the last week, dropping some 11%. But this could be related to the soft market, which is down about 10% in the same period.

Check out our latest analysis for CPPGroup

Given that CPPGroup 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.

In the last three years, CPPGroup saw its revenue grow by 17% per year, compound. That’s a pretty good rate of top-line growth. That contrasts with the weak share price, which has fallen 32% compounded, over three years. The market must have had really high expectations to be disappointed with this progress. So this is one stock that might be worth investigating further, or even adding to your watchlist.

The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

AIM:CPP Income Statement, March 11th 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market lost about 9.0% in the twelve months, CPPGroup shareholders did even worse, losing 35%. 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. On the bright side, long term shareholders have made money, with a gain of 1.7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 – CPPGroup has 3 warning signs we think you should be aware of.

But note: CPPGroup may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.

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