Strong week for SMA Solar Technology (ETR:S92) shareholders doesn't alleviate pain of one-year loss

SMA Solar Technology AG (ETR:S92) shareholders should be happy to see the share price up 10% in the last week. But that isn't much consolation to those who have suffered through the declines of the last year. During that time the share price has sank like a stone, descending 70%. Some might say the recent bounce is to be expected after such a bad drop. Of course, it could be that the fall was overdone.

While the stock has risen 10% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Our free stock report includes 2 warning signs investors should be aware of before investing in SMA Solar Technology. Read for free now.

SMA Solar Technology isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 just one year SMA Solar Technology saw its revenue fall by 20%. That looks pretty grim, at a glance. The market obviously agrees, since the share price tanked 70%. That's a stern reminder that profitless companies need to grow the top line, at the very least. But markets do over-react, so there opportunity for investors who are willing to take the time to dig deeper and understand the business.

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

SMA Solar Technology shareholders are down 70% for the year (even including dividends), but the market itself is up 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% 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. It's always interesting to track share price performance over the longer term. But to understand SMA Solar Technology better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for SMA Solar Technology you should be aware of.

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 German 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.