Stock Analysis

Aquaporin Investors Sitting On Loss Of 13% If They Invested A Year Ago

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Aquaporin A/S (CPH:AQP) shareholders should be happy to see the share price up 23% in the last month. But that doesn't change the reality of under-performance over the last twelve months. In fact the stock is down 13% in the last year, well below the market return.

Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Aquaporin

Because Aquaporin 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Aquaporin increased its revenue by 162%. That's well above most other pre-profit companies. Given the revenue growth, the share price drop of 13% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.

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

CPSE:AQP Earnings and Revenue Growth January 28th 2023

Take a more thorough look at Aquaporin's financial health with this free report on its balance sheet.

A Different Perspective

Given that the market gained 12% in the last year, Aquaporin shareholders might be miffed that they lost 13%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Putting aside the last twelve months, it's good to see the share price has rebounded by 3.8%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 4 warning signs for Aquaporin (1 is a bit unpleasant!) that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

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