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Even the best stock pickers will make plenty of bad investments. Anyone who held Nine Energy Service, Inc. (NYSE:NINE) over the last year knows what a loser feels like. In that relatively short period, the share price has plunged 52%. Nine Energy Service hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days.
Given that Nine Energy Service 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 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 twelve months, Nine Energy Service increased its revenue by 44%. That’s definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 52% in that time. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. For us it’s important to consider when you think a company will become profitable, if you’re basing your valuation on revenue.
If you are thinking of buying or selling Nine Energy Service stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Given that the market gained 7.2% in the last year, Nine Energy Service shareholders might be miffed that they lost 52%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 31%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before spending more time on Nine Energy Service it might be wise to click here to see if insiders have been buying or selling shares.
Of course Nine Energy Service 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 US exchanges.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.