As an investor, mistakes are inevitable. But really bad investments should be rare. So spare a thought for the long term shareholders of Senseonics Holdings, Inc. (NYSEMKT:SENS); the share price is down a whopping 73% in the last three years. That would be a disturbing experience. And over the last year the share price fell 71%, so we doubt many shareholders are delighted. Furthermore, it’s down 46% in about a quarter. That’s not much fun for holders. 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.
Because Senseonics Holdings is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
Over three years, Senseonics Holdings grew revenue at 96% per year. That’s well above most other pre-profit companies. So why has the share priced crashed 36% per year, in the same time? 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.
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
Senseonics Holdings shareholders are down 71% for the year, falling short of the market return. Meanwhile, the broader market slid about 0.5%, likely weighing on the stock. The three-year loss of 36% per year isn’t as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.