Further weakness as Oncology Institute (NASDAQ:TOI) drops 29% this week, taking one-year losses to 36%

By
Simply Wall St
Published
November 24, 2021
NasdaqCM:TOI
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Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by The Oncology Institute, Inc. (NASDAQ:TOI) shareholders over the last year, as the share price declined 36%. That contrasts poorly with the market return of 26%. Because Oncology Institute hasn't been listed for many years, the market is still learning about how the business performs. Unfortunately the share price momentum is still quite negative, with prices down 35% in thirty days.

Since Oncology Institute has shed US$188m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Oncology Institute

Given that Oncology Institute didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Oncology Institute grew its revenue by 14% over the last year. While that may seem decent it isn't great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 36% in a year. It's important not to lose sight of the fact that profitless companies must grow. So remember, if you buy a profitless company then you risk being a profitless investor.

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

earnings-and-revenue-growth
NasdaqCM:TOI Earnings and Revenue Growth November 24th 2021

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

A Different Perspective

While Oncology Institute shareholders are down 36% for the year, the market itself is up 26%. 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. The share price decline has continued throughout the most recent three months, down 35%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It's always interesting to track share price performance over the longer term. But to understand Oncology Institute better, we need to consider many other factors. Even so, be aware that Oncology Institute is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

We will like Oncology Institute 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.

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.

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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.