We believe investing is smart because history shows that stock markets go higher in the long term. But not every stock you buy will perform as well as the overall market. For example, the Ecocab Co., Ltd. (KOSDAQ:128540), share price is up over the last year, but its gain of 39% trails the market return. We’ll need to follow Ecocab for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.
Because Ecocab made a loss in the last twelve months, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Ecocab saw its revenue shrink by 15%. The lacklustre gain of 39% over twelve months, is not a bad result given the falling revenue. Generally we’re pretty unenthusiastic about loss making stocks that are not growing revenue.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
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
Ecocab shareholders have gained 39% for the year. While it’s always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 48%. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we’ve discovered 4 warning signs for Ecocab (2 are a bit unpleasant!) that you should be aware of before investing here.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on KR 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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