Investing in stocks comes with the risk that the share price will fall. And unfortunately for Bharat Wire Ropes Limited (NSE:BHARATWIRE) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 69% in that time. Notably, shareholders had a tough run over the longer term, too, with a drop of 30% in the last three years. The falls have accelerated recently, with the share price down 21% in the last three months.
Bharat Wire Ropes isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 twelve months, Bharat Wire Ropes increased its revenue by 25%. We think that is pretty nice growth. Meanwhile, the share price tanked 69%, suggesting the market had much higher expectations. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. For us it’s important to consider when you think a company will become profitable, if you’re basing your valuation on revenue.
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
The last twelve months weren’t great for Bharat Wire Ropes shares, which performed worse than the market, costing holders 69%. Meanwhile, the broader market slid about 8.4%, likely weighing on the stock. The three-year loss of 11% per year isn’t as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
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 IN exchanges.
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