Neuronetics, Inc. (NASDAQ:STIM) shareholders have seen the share price descend 23% over the month. But that isn't a problem when you consider how the share price has soared over the last year. In that time, shareholders have had the pleasure of a 980% boost to the share price. So it is not that surprising to see the stock retrace a little. Only time will tell if there is still too much optimism currently reflected in the share price.
Anyone who held for that rewarding ride would probably be keen to talk about it.
Neuronetics 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 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 year Neuronetics saw its revenue shrink by 21%. This is in stark contrast to the splendorous stock price, which has rocketed 980% since this time a year ago. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. While this gain looks like speculative buying to us, sometimes speculation pays off.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Neuronetics shareholders should be happy with the total gain of 980% over the last twelve months. That's better than the more recent three month gain of 63%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Neuronetics has 4 warning signs we think you should be aware of.
We will like Neuronetics better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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. 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.
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