Netlinkz (ASX:NET) shareholders are up 15% this past week, but still in the red over the last year

By
Simply Wall St
Published
September 27, 2021
ASX:NET
Source: Shutterstock

This week we saw the Netlinkz Limited (ASX:NET) share price climb by 15%. But that's not enough to compensate for the decline over the last twelve months. During that time the share price has sank like a stone, descending 66%. It's not that amazing to see a bounce after a drop like that. It may be that the fall was an overreaction.

While the stock has risen 15% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

See our latest analysis for Netlinkz

Netlinkz wasn't profitable in the last twelve months, 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last twelve months, Netlinkz increased its revenue by 174%. That's a strong result which is better than most other loss making companies. Meanwhile, the share price slid 66%. This could mean hype has come out of the stock because the bottom line is concerning investors. Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?

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

earnings-and-revenue-growth
ASX:NET Earnings and Revenue Growth September 28th 2021

If you are thinking of buying or selling Netlinkz stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Netlinkz shareholders are down 65% for the year, but the market itself is up 30%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 7% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with Netlinkz (including 1 which doesn't sit too well with us) .

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 AU exchanges.

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