Shareholders in SLM Solutions Group (ETR:AM3D) have lost 66%, as stock drops 11% this past week

By
Simply Wall St
Published
February 24, 2022
XTRA:AM3D
Source: Shutterstock

Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. Zooming in on an example, the SLM Solutions Group AG (ETR:AM3D) share price dropped 66% in the last half decade. That's an unpleasant experience for long term holders. And we doubt long term believers are the only worried holders, since the stock price has declined 29% over the last twelve months. The falls have accelerated recently, with the share price down 19% in the last three months. But this could be related to the weak market, which is down 9.2% in the same period.

After losing 11% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

View our latest analysis for SLM Solutions Group

SLM Solutions Group 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last five years SLM Solutions Group saw its revenue shrink by 6.9% per year. That's not what investors generally want to see. With neither profit nor revenue growth, the loss of 11% per year doesn't really surprise us. The chance of imminent investor enthusiasm for this stock seems slimmer than Louise Brooks. Ultimately, it may be worth watching - should revenue pick up, the share price might follow.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
XTRA:AM3D Earnings and Revenue Growth February 24th 2022

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for SLM Solutions Group in this interactive graph of future profit estimates.

A Different Perspective

Investors in SLM Solutions Group had a tough year, with a total loss of 29%, against a market gain of about 4.0%. 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 11% over the last half decade. 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. It's always interesting to track share price performance over the longer term. But to understand SLM Solutions Group better, we need to consider many other factors. Even so, be aware that SLM Solutions Group is showing 3 warning signs in our investment analysis , you should know about...

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 DE exchanges.

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