Despite currently being unprofitable, Sadbhav Engineering (NSE:SADBHAV) has delivered a 166% return to shareholders over 1 year

Sadbhav Engineering Limited (NSE:SADBHAV) shareholders might be concerned after seeing the share price drop 11% in the last week. But that doesn't change the fact that the returns over the last year have been very strong. Like an eagle, the share price soared 166% in that time. So some might not be surprised to see the price retrace some. The real question is whether the business is trending in the right direction.

While the stock has fallen 11% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.

View our latest analysis for Sadbhav Engineering

Because Sadbhav Engineering 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Sadbhav Engineering grew its revenue by 8.2% last year. That's not great considering the company is losing money. So we wouldn't have expected the share price to rise by 166%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

A Different Perspective

We're pleased to report that Sadbhav Engineering shareholders have received a total shareholder return of 166% over one year. That certainly beats the loss of about 13% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Sadbhav Engineering better, we need to consider many other factors. For instance, we've identified 3 warning signs for Sadbhav Engineering (2 can't be ignored) that you should be aware of.

Of course Sadbhav Engineering may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com