Even after rising 14% this past week, Creso Pharma (ASX:CPH) shareholders are still down 87% over the past three years




  • In Business
  • 2022-05-23 23:11:54Z
  • By Simply Wall St.
 

It's nice to see the Creso Pharma Limited (ASX:CPH) share price up 14% in a week. But that doesn't change the fact that the returns over the last three years have been stomach churning. The share price has sunk like a leaky ship, down 87% in that time. So it sure is nice to see a bit of an improvement. Only time will tell if the company can sustain the turnaround. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

On a more encouraging note the company has added AU$9.1m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

See our latest analysis for Creso Pharma

Creso Pharma wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, Creso Pharma grew revenue at 45% per year. That's well above most other pre-profit companies. So why has the share priced crashed 23% 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.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Take a more thorough look at Creso Pharma's financial health with this free report on its balance sheet.

A Different Perspective

While the broader market gained around 6.3% in the last year, Creso Pharma shareholders lost 59%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 13% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Creso Pharma (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

COMMENTS

More Related News

What Is The Ownership Structure Like For Textainer Group Holdings Limited (NYSE:TGH)?
What Is The Ownership Structure Like For Textainer Group Holdings Limited (NYSE:TGH)?

A look at the shareholders of Textainer Group Holdings Limited ( NYSE:TGH ) can tell us which group is most powerful...

As Petco Health and Wellness Company (NASDAQ:WOOF) increases 6.7% this past week, investors may now be noticing the company
As Petco Health and Wellness Company (NASDAQ:WOOF) increases 6.7% this past week, investors may now be noticing the company's one-year earnings growth

It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both...

What You Need To Know About Faron Pharmaceuticals Oy
What You Need To Know About Faron Pharmaceuticals Oy's (LON:FARN) Investor Composition

A look at the shareholders of Faron Pharmaceuticals Oy ( LON:FARN ) can tell us which group is most powerful. Large...

Toshiba shareholders to endorse director nominees as buyout expectations grow
Toshiba shareholders to endorse director nominees as buyout expectations grow
  • US
  • 2022-06-27 06:50:04Z

Toshiba Corp's shareholders are expected to endorse all proposed directors, including two from its hedge fund investors, on Tuesday in a move that could mark...

The past three years for Tullow Oil (LON:TLW) investors has not been profitable
The past three years for Tullow Oil (LON:TLW) investors has not been profitable

Every investor on earth makes bad calls sometimes. But really bad investments should be rare. So take a moment to...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • Home Painting in Qatar
    (2022-06-13 17:53:54Z)

    Thanks for sharing this with so much of detailed information, its much more to learn from your article. Keep sharing such good stuff.

    REPLY
  • Apartment Painting Dubai
    (2022-06-13 17:54:36Z)

    This type of article that enlighted me all throughout and thanks for this.This going to be excitement and have fun to read. thank to it.

    REPLY

Top News: Business