Easy Come, Easy Go: How Eastern Silk Industries (NSE:EASTSILK) Shareholders Got Unlucky And Saw 81% Of Their Cash Evaporate

Even the best investor on earth makes unsuccessful investments. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. It must have been painful to be a Eastern Silk Industries Limited (NSE:EASTSILK) shareholder over the last year, since the stock price plummeted 81% in that time. That’d be enough to make even the strongest stomachs churn. Even if you look out three years, the returns are still disappointing, with the share price down (the share price is down 77%) in that time. Shareholders have had an even rougher run lately, with the share price down 54% in the last 90 days.

We really feel for shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind there’s more to life than money, anyway.

Check out our latest analysis for Eastern Silk Industries

Eastern Silk Industries isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Eastern Silk Industries grew its revenue by 28% over the last year. We think that is pretty nice growth. Unfortunately, the market wanted something better, given it sent the share price 81% lower during the year. One fear might be that the company might be losing too much money and will need to raise more. It seems that the market has concerns about the future, because that share price action does not seem to reflect the revenue growth at all.

The company’s revenue and earnings (over time) are depicted in the image below.

NSEI:EASTSILK Income Statement, October 15th 2019
NSEI:EASTSILK Income Statement, October 15th 2019

If you are thinking of buying or selling Eastern Silk Industries stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

While the broader market gained around 2.8% in the last year, Eastern Silk Industries shareholders lost 81%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 24% per year over five years. 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. You could get a better understanding of Eastern Silk Industries’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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.