Investors are selling off House of Control Group (OB:HOC), lack of profits no doubt contribute to shareholders one-year loss

By
Simply Wall St
Published
November 24, 2021
OB:HOC
Source: Shutterstock

Investors can approximate the average market return by buying an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by House of Control Group AS (OB:HOC) shareholders over the last year, as the share price declined 37%. That's disappointing when you consider the market returned 28%. Because House of Control Group hasn't been listed for many years, the market is still learning about how the business performs. The share price has dropped 46% in three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.

After losing 14% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for House of Control Group

House of Control Group wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, House of Control Group increased its revenue by 44%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 37%. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.

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

earnings-and-revenue-growth
OB:HOC Earnings and Revenue Growth November 25th 2021

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think House of Control Group will earn in the future (free profit forecasts).

A Different Perspective

Given that the market gained 28% in the last year, House of Control Group shareholders might be miffed that they lost 37%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's worth noting that the last three months did the real damage, with a 46% decline. So it seems like some holders have been dumping the stock of late - and that's not bullish. It's always interesting to track share price performance over the longer term. But to understand House of Control Group better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for House of Control Group you should be aware of.

House of Control Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NO exchanges.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.