PowerCell Sweden (STO:PCELL investor three-year losses grow to 85% as the stock sheds kr342m this past week

PowerCell Sweden AB (publ) (STO:PCELL) shareholders will doubtless be very grateful to see the share price up 54% in the last quarter. But the last three years have seen a terrible decline. The share price has sunk like a leaky ship, down 85% in that time. Arguably, the recent bounce is to be expected after such a bad drop. But the more important question is whether the underlying business can justify a higher price still. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

Since PowerCell Sweden has shed kr342m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

View our latest analysis for PowerCell Sweden

PowerCell Sweden 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 desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, PowerCell Sweden saw its revenue grow by 27% per year, compound. That is faster than most pre-profit companies. So on the face of it we're really surprised to see the share price down 23% a year in the same time period. You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. Unless the balance sheet is strong, the company might have to raise capital.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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

A Different Perspective

While the broader market gained around 20% in the last year, PowerCell Sweden shareholders lost 21%. 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. Unfortunately, longer term shareholders are suffering worse, given the loss of 12% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand PowerCell Sweden better, we need to consider many other factors. For example, we've discovered 2 warning signs for PowerCell Sweden that you should be aware of before investing here.

But note: PowerCell Sweden may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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