It's nice to see the home24 SE (ETR:H24) share price up 10% in a week. But that's not enough to compensate for the decline over the last twelve months. Specifically, the stock price slipped by 61% in that time. So the bounce should be viewed in that context. It may be that the fall was an overreaction.
While the last year has been tough for home24 shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.
Because home24 made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
home24 grew its revenue by 37% over the last year. We think that is pretty nice growth. Meanwhile, the share price tanked 61%, suggesting the market had much higher expectations. It is of course possible that the business will still deliver strong growth, it will just take longer than expected to do it. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.
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 home24's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
home24 shareholders are down 61% for the year, falling short of the market return. Meanwhile, the broader market slid about 2.5%, likely weighing on the stock. Fortunately the longer term story is brighter, with total returns averaging about 8% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. It's always interesting to track share price performance over the longer term. But to understand home24 better, we need to consider many other factors. Even so, be aware that home24 is showing 2 warning signs in our investment analysis , you should know about...
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 DE exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.