It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Midsummer AB (publ) (STO:MIDS) share price slid 24% over twelve months. That contrasts poorly with the market return of 14%. We wouldn't rush to judgement on Midsummer because we don't have a long term history to look at. It's down 36% in about a quarter. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
Midsummer isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In just one year Midsummer saw its revenue fall by 17%. That looks pretty grim, at a glance. The stock price has languished lately, falling 24% in a year. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Midsummer's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Given that the market gained 14% in the last year, Midsummer shareholders might be miffed that they lost 24%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's worth noting that the last three months did the real damage, with a 36% decline. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. It's always interesting to track share price performance over the longer term. But to understand Midsummer better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Midsummer you should be aware of, and 1 of them is a bit concerning.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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