Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. For example, the THC Global Group Limited (ASX:THC) share price is down 14% in the last year. That contrasts poorly with the market return of 11%. THC Global Group hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. There was little comfort for shareholders in the last week as the price declined a further 1.9%.
See our latest analysis for THC Global Group
THC Global Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 twelve months, THC Global Group increased its revenue by 44%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 14%. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
Balance sheet strength is crucual. It might be well worthwhile taking a look at our freereport on how its financial position has changed over time.
A Different Perspective
Given that the market gained 11% in the last year, THC Global Group shareholders might be miffed that they lost 14%. 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. It's great to see a nice little 7.1% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. If you would like to research THC Global Group in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this freelist 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.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 editorial-team@simplywallst.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.