Long term investing is the way to go, but that doesn’t mean you should hold every stock forever. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held LightwaveRF plc (LON:LWRF) for five whole years – as the share price tanked 75%. And some of the more recent buyers are probably worried, too, with the stock falling 39% in the last year. Shareholders have had an even rougher run lately, with the share price down 20% in the last 90 days.
Because LightwaveRF is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn’t make profits, we’d generally expect to see good revenue growth. 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.
Over five years, LightwaveRF grew its revenue at 7.2% per year. That’s a fairly respectable growth rate. So it is unexpected to see the stock down 24% per year in the last five years. The market can be a harsh master when your company is losing money and revenue growth disappoints.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on LightwaveRF’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in LightwaveRF had a tough year, with a total loss of 39%, against a market gain of about 6.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 24% 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. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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 GB exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.