While shareholders of va-Q-tec (ETR:VQT) are in the black over 3 years, those who bought a week ago aren't so fortunate

By
Simply Wall St
Published
May 11, 2022
XTRA:VQT
Source: Shutterstock

Some va-Q-tec AG (ETR:VQT) shareholders are probably rather concerned to see the share price fall 34% over the last three months. But don't let that distract from the very nice return generated over three years. After all, the share price is up a market-beating 96% in that time.

In light of the stock dropping 13% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

View our latest analysis for va-Q-tec

Given that va-Q-tec only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years va-Q-tec has grown its revenue at 24% annually. That's much better than most loss-making companies. The share price rise of 25% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put va-Q-tec on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.

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

earnings-and-revenue-growth
XTRA:VQT Earnings and Revenue Growth May 11th 2022

We know that va-Q-tec has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We regret to report that va-Q-tec shareholders are down 50% for the year. Unfortunately, that's worse than the broader market decline of 11%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. For instance, we've identified 4 warning signs for va-Q-tec (2 are a bit concerning) that you should be aware of.

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 DE exchanges.

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