It’s easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Yatra Online, Inc. (NASDAQ:YTRA) shareholders over the last year, as the share price declined 43%. That’s well bellow the market return of 6.0%. We wouldn’t rush to judgement on Yatra Online because we don’t have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 24% in the last 90 days.
Given that Yatra Online 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.
Yatra Online’s revenue didn’t grow at all in the last year. In fact, it fell 8.6%. That’s not what investors generally want to see. Shareholders have seen the share price drop 43% in that time. That seems pretty reasonable given the lack of both profits and revenue growth. We think most holders must believe revenue growth will improve, or else costs will decline.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
You can see how its financial situation has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Given that the market gained 6.0% in the last year, Yatra Online shareholders might be miffed that they lost 43%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 24% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
We will like Yatra Online better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.