Stock Analysis

Investors one-year losses grow to 40% as the stock sheds US$131m this past week

  •  Updated
LSE:HTWS
Source: Shutterstock

The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the Helios Towers plc (LON:HTWS) share price slid 40% over twelve months. That's disappointing when you consider the market declined 13%. Helios Towers hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 15% in the last three months.

If the past week is anything to go by, investor sentiment for Helios Towers isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

Before we look at the performance, you might like to know that our analysis indicates that HTWS is potentially undervalued!

Given that Helios Towers didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Helios Towers saw its revenue grow by 19%. That's definitely a respectable growth rate. Meanwhile, the share price is down 40% over twelve months, which is disappointing given the progress made. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
LSE:HTWS Earnings and Revenue Growth September 30th 2022

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Helios Towers in this interactive graph of future profit estimates.

A Different Perspective

Helios Towers shareholders are down 40% for the year, even worse than the market loss of 13%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 15%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. If you would like to research Helios Towers in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Helios Towers is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About LSE:HTWS

Helios Towers

Helios Towers plc, an independent tower company, acquires, builds, and operates telecommunications towers and passive infrastructure.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth5
Past Performance0
Financial Health2
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

High growth potential and slightly overvalued.