As every investor would know, you don’t hit a homerun every time you swing. But it’s not unreasonable to try to avoid truly shocking capital losses. So spare a thought for the long term shareholders of Xunlei Limited (NASDAQ:XNET); the share price is down a whopping 73% in the last twelve months. That’d be enough to make even the strongest stomachs churn. We note that it has not been easy for shareholders over three years, either; the share price is down 47% in that time.
Xunlei isn’t a profitable company, so it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Xunlei grew its revenue by 15% over the last year. That’s definitely a respectable growth rate. However, it seems like the market wanted more, since the share price is down 73%. 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 chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
This free interactive report on Xunlei’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Xunlei shareholders are down 73% for the year, but the broader market is up 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 19% 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. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.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 email@example.com. 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.