FSN E-Commerce Ventures' Retreating Earnings Over Last Year Contributes To 55% Shareholder Losses

Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of FSN E-Commerce Ventures Limited (NSE:NYKAA) have suffered share price declines over the last year. In that relatively short period, the share price has plunged 55%. We wouldn't rush to judgement on FSN E-Commerce Ventures because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.

On a more encouraging note the company has added ₹19b to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

Check out our latest analysis for FSN E-Commerce Ventures

While FSN E-Commerce Ventures made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last year FSN E-Commerce Ventures saw its revenue grow by 37%. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 55% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

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

FSN E-Commerce Ventures is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling FSN E-Commerce Ventures stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

Given that the market gained 5.0% in the last year, FSN E-Commerce Ventures shareholders might be miffed that they lost 55%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 25% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 4 warning signs we've spotted with FSN E-Commerce Ventures (including 1 which can't be ignored) .

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.

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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.