Did Changing Sentiment Drive BSM Technologies’s Share Price Down A Worrying 62%?

BSM Technologies Inc. (TSE:GPS) shareholders should be happy to see the share price up 18% in the last quarter. But that can’t change the reality that over the longer term (five years), the returns have been really quite dismal. The share price has failed to impress anyone , down a sizable 62% during that time. So we’re not so sure if the recent bounce should be celebrated. Of course, this could be the start of a turnaround.

View our latest analysis for BSM Technologies

Because BSM Technologies is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 half decade, BSM Technologies saw its revenue increase by 21% per year. That’s better than most loss-making companies. In contrast, the share price is has averaged a loss of 17% per year – that’s quite disappointing. It’s safe to say investor expectations are more grounded now. Given the revenue growth we’d consider the stock to be quite an interesting prospect if the company has a clear path to profitability.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

TSX:GPS Income Statement, March 3rd 2019
TSX:GPS Income Statement, March 3rd 2019

Balance sheet strength is crucual. 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 the broader market gained around 4.9% in the last year, BSM Technologies shareholders lost 32%. 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. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 17% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Before spending more time on BSM Technologies it might be wise to click here to see if insiders have been buying or selling shares.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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