Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Questerre Energy Corporation (TSE:QEC) shareholders. Unfortunately, they have held through a 67% decline in the share price in that time. It's down 11% in the last seven days.
Questerre Energy 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. 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 three years Questerre Energy saw its revenue shrink by 9.1% per year. That is not a good result. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 19% per year. Of course, it's the future that will determine whether today's price is a good one. We'd be pretty wary of this one until it makes a profit, because we don't specialize in finding turnaround situations.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Questerre Energy's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Questerre Energy shareholders have received a total shareholder return of 38% over the last year. There's no doubt those recent returns are much better than the TSR loss of 3% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. Case in point: We've spotted 1 warning sign for Questerre Energy you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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