It's nice to see the Else Nutrition Holdings Inc. (CVE:BABY) share price up 22% in a week. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 49% in a year, falling short of the returns you could get by investing in an index fund.
The recent uptick of 22% could be a positive sign of things to come, so let's take a lot at historical fundamentals.
Else Nutrition Holdings 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Else Nutrition Holdings saw its revenue grow by 213%. That's well above most other pre-profit companies. Given the revenue growth, the share price drop of 49% seems quite harsh. Our sympathies to shareholders who are now underwater. 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).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
While Else Nutrition Holdings shareholders are down 49% for the year, the market itself is up 28%. 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. With the stock down 33% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. To that end, you should learn about the 4 warning signs we've spotted with Else Nutrition Holdings (including 1 which is significant) .
We will like Else Nutrition Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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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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.
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Else Nutrition Holdings
Else Nutrition Holdings Inc. engages in the development, production, and sale of food and nutrition products for infants, toddlers, children, and adults in North America and Israel.
Mediocre balance sheet with limited growth.