Hillman Solutions Inc (NASDAQ:HLMN) shareholders suffered a 34% loss after investing in the stock a year ago

The easiest way to take advantage of a bull market is to buy an index fund. When you buy individual stocks, you can earn higher profits, but you also run the risk of underperformance. This downside risk was materialized by Hillman Solutions Corp. (NASDAQ:HLMN) shareholders over the past year, with the stock price down 34%. This contrasts poorly with the market’s 23% decline. Hillman Solutions hasn’t been listed for a long time, so while we’re wary of recent listings that perform poorly, it may still prove its worth over time. The falls have accelerated recently, with the stock price falling 23% in the past three months.

Now let’s look at the fundamentals of the business and see if the long-term shareholder return matches the performance of the underlying business.

Given that Hillman Solutions has posted a loss over the past twelve months, we think the market is likely more focused on revenue and revenue growth, at least for now. When a business is not making a profit, you generally expect to see good revenue growth. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

Hillman Solutions increased its revenue by 1.6% over last year. It’s not a very high growth rate since it’s not making a profit. Given this fairly weak revenue growth (and lack of earnings), it’s not particularly surprising to see the stock drop 34% in one year. In a hot market, it’s easy to forget that growth is the engine of a loss-making business. But if you buy a loss-making company, you could become a loss-making investor.

You can see how earnings and income have changed over time in the image below (click on the graph to see exact values).

NasdaqGM: HLMN Earnings and Revenue Growth October 19, 2022

We consider it positive that insiders have made significant purchases over the past year. Even so, future earnings will be far more important to whether current shareholders are making money. We therefore recommend that you consult this free report showing consensus forecast

A different perspective

Hillman Solutions shareholders are down 34% for the year, even worse than the market’s 23% loss. It’s no doubt a disappointment, but the stock may well have done better in a stronger market. With the stock down 23% in the past three months, the market doesn’t seem to believe the company has solved all of its problems. Given the relatively short history of this stock, we would remain fairly cautious until we see strong trading performance. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. To this end, you should be aware of the 2 warning signs we spotted with Hillman Solutions .

If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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