Even the best investor on earth makes unsuccessful investments. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held The Yield Growth Corp. (CSE:BOSS) during the last year don’t lose the lesson, in addition to the 73% hit to the value of their shares. A loss like this is a stark reminder that portfolio diversification is important. Yield Growth hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it’s down 37% in about a quarter. That’s not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 18% in the same timeframe.
Check out our latest analysis for Yield Growth
Given that Yield Growth 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Yield Growth grew its revenue by 63% over the last year. That’s a strong result which is better than most other loss making companies. So the hefty 73% share price crash makes us think the company has somehow offended market participants. There’s clearly something unusual going on here such as an acquisition that hasn’t delivered expected profits. What is clear is that the market is not judging the company on its revenue growth right now. Of course, markets do over-react so share price drop may be too harsh.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Yield Growth stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Yield Growth shareholders are down 73% for the year, even worse than the market loss of 12%. There’s no doubt that’s a disappointment, but the stock may well have fared better in a stronger market. With the stock down 37% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. For instance, we’ve identified 7 warning signs for Yield Growth (2 don’t sit too well with us) that you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do 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.
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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