A good week for shareholders of Aedes SIIQ (BIT:AED) does not alleviate the pain of the loss of three years
Aedes SIIQ SpA (BIT:AED) Shareholders should be happy to see the share price increase by 14% last week. But the last three years have seen a terrible decline. The stock price sank like a leaky ship, down 87% during that time. Arguably, the recent rebound is to be expected after such a bad fall. Of course, the real question is whether the company can sustain a turnaround. We really feel for the shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind that there’s more to life than just money, anyway.
The recent 14% rise could be a positive sign of things to come, so let’s take a lot of look at historical fundamentals.
See our latest analysis for Aedes SIIQ
Given that Aedes SIIQ has posted losses over the past twelve months, we think the market is likely more focused on revenue and revenue growth, at least for now. Generally speaking, companies without profits should increase their revenue every year, and at a good pace. Indeed, rapid revenue growth can be easily extrapolated to predict profits, often of considerable size.
Over the last three years, Aedes SIIQ has seen its turnover grow by 44% per compound year. That’s way above most other nonprofits. So on the face of it, we’re really surprised to see the stock price drop 23% annually over the same period. You would want to take a close look at the balance sheet, as well as the losses. Ultimately, revenue growth doesn’t mean much if the business can’t scale well. Unless the balance sheet is strong, the company may need to raise capital.
The graph below illustrates the evolution of income and revenue over time (reveal the exact values by clicking on the image).
Take a closer look at the financial health of Aedes SIIQ with this free report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We have already covered the evolution of the share price of Aedes SIIQ, but it is also worth mentioning its total shareholder return (TSR). TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. Aedes SIIQ did not pay dividends, but its TSR of -79% exceeds its share price return of -87%, implying that it either started a business or raised capital at a discount; thereby providing added value to shareholders.
A different perspective
Aedes SIIQ shareholders are down 52% for the year, but the broader market is up 17%. Of course, the long term matters more than the short term, and even big stocks will sometimes have a bad year. Shareholders have lost 21% annually over the past three years, so the share price decline has become more pronounced over the past year; a potential symptom of unresolved challenges. Although Baron Rothschild said “buy when there is blood in the streets, even if the blood is yours”, he also focuses on high quality stocks with strong prospects. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Example: we have identified 3 warning signs for Aedes SIIQ you should know, and 2 of them make us uncomfortable.
For those who like to find winning investments this free list of growing companies with recent insider buying, might be just the ticket.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on computer exchanges.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.