Did Changing Sentiment Drive Elgeka's (ATH:ELGEK) Share Price Down A Worrying 52%?

Over the last month the Elgeka S.A. (ATH:ELGEK) has been much stronger than before, rebounding by 46%. But don't envy holders -- looking back over 5 years the returns have been really bad. The share price has failed to impress anyone , down a sizable 52% during that time. So we're not so sure if the recent bounce should be celebrated. Of course, this could be the start of a turnaround.

See our latest analysis for Elgeka

Given that Elgeka 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over half a decade Elgeka reduced its trailing twelve month revenue by 18% for each year. That's definitely a weaker result than most pre-profit companies report. It seems appropriate, then, that the share price slid about 14% annually during that time. It's fair to say most investors don't like to invest in loss making companies with falling revenue. This looks like a really risky stock to buy, at a glance.

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

Balance sheet strength is crucual. It might be well worthwhile taking a look at our freereport on how its financial position has changed over time.

A Different Perspective

While the broader market lost about 8.3% in the twelve months, Elgeka shareholders did even worse, losing 24%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 14% 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. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

But note: Elgeka may not be the best stock to buy. So take a peek at this freelist of interesting companies with past earnings growth (and further growth forecast).

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.