It’s not a secret that every investor will make bad investments, from time to time. But serious investors should think long and hard about avoiding extreme losses. It must have been painful to be a Hitech & Development Wireless Sweden Holding AB (publ) (STO:HDW B) shareholder over the last year, since the stock price plummeted 80% in that time. That’d be a striking reminder about the importance of diversification. We wouldn’t rush to judgement on Hitech & Development Wireless Sweden Holding because we don’t have a long term history to look at. The falls have accelerated recently, with the share price down 33% in the last three months. Of course, this share price action may well have been influenced by the 24% decline in the broader market, throughout the period.
Because Hitech & Development Wireless Sweden Holding made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
In the last year Hitech & Development Wireless Sweden Holding saw its revenue grow by 75%. That’s well above most other pre-profit companies. So on the face of it we’re really surprised to see the share price down 80% over twelve months. Something weird is definitely impacting the stock price; we’d venture the company has destroyed value somehow. We’d recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that’s for sure. Of course, markets do over-react so share price drop may be too harsh.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Hitech & Development Wireless Sweden Holding’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Hitech & Development Wireless Sweden Holding shareholders are down 78% for the year, even worse than the market loss of 11%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 33% 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. It’s always interesting to track share price performance over the longer term. But to understand Hitech & Development Wireless Sweden Holding better, we need to consider many other factors. To that end, you should learn about the 6 warning signs we’ve spotted with Hitech & Development Wireless Sweden Holding (including 3 which is shouldn’t be ignored) .
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE exchanges.
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.
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