Would Shareholders Who Purchased Carbon Revolution's (ASX:CBR) Stock Year Be Happy With The Share price Today?

While it may not be enough for some shareholders, we think it is good to see the Carbon Revolution Limited (ASX:CBR) share price up 29% in a single quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 27% in a year, falling short of the returns you could get by investing in an index fund.

View our latest analysis for Carbon Revolution

Given that Carbon Revolution 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Carbon Revolution grew its revenue by 157% over the last year. That's well above most other pre-profit companies. The share price drop of 27% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Carbon Revolution's financial health with this free report on its balance sheet.

A Different Perspective

Given that the market gained 4.4% in the last year, Carbon Revolution shareholders might be miffed that they lost 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 29% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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 example, we've discovered 3 warning signs for Carbon Revolution that you should be aware of before investing here.

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 AU exchanges.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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