Aeris Indústria e Comércio de Equipamentos para Geração de Energia (BVMF:AERI3 shareholders incur further losses as stock declines 10% this week, taking one-year losses to 58%

Investing in stocks comes with the risk that the share price will fall. And unfortunately for Aeris Indústria e Comércio de Equipamentos para Geração de Energia S.A. (BVMF:AERI3) shareholders, the stock is a lot lower today than it was a year ago. In that relatively short period, the share price has plunged 58%. We wouldn't rush to judgement on Aeris Indústria e Comércio de Equipamentos para Geração de Energia 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 36% in the last 90 days. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

If the past week is anything to go by, investor sentiment for Aeris Indústria e Comércio de Equipamentos para Geração de Energia isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

View our latest analysis for Aeris Indústria e Comércio de Equipamentos para Geração de Energia

Aeris Indústria e Comércio de Equipamentos para Geração de Energia isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Aeris Indústria e Comércio de Equipamentos para Geração de Energia saw its revenue grow by 23%. That's definitely a respectable growth rate. Meanwhile, the share price tanked 58%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling Aeris Indústria e Comércio de Equipamentos para Geração de Energia stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While Aeris Indústria e Comércio de Equipamentos para Geração de Energia shareholders are down 58% for the year (even including dividends), the market itself is up 2.8%. 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. The share price decline has continued throughout the most recent three months, down 36%, suggesting an absence of enthusiasm from investors. 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 Aeris Indústria e Comércio de Equipamentos para Geração de Energia better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Aeris Indústria e Comércio de Equipamentos para Geração de Energia , and understanding them should be part of your investment process.

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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Brazilian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.