Even the best stock pickers will make plenty of bad investments. And there’s no doubt that Astro Corporation (GTSM:3064) stock has had a really bad year. The share price is down a hefty 57% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 45% lower than three years ago). Furthermore, it’s down 21% in about a quarter. That’s not much fun for holders.
Astro isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last twelve months, Astro increased its revenue by 129%. That’s well above most other pre-profit companies. In contrast the share price is down 57% over twelve months. Yes, the market can be a fickle mistress. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on Astro’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in Astro had a tough year, with a total loss of 57%, against a market gain of about 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. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 15% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Astro better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we’ve spotted with Astro (including 1 which is can’t be ignored) .
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on TW 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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