While it may not be enough for some shareholders, we think it is good to see the Currency Exchange International, Corp. (TSE:CXI) share price up 13% in a single quarter. But over the last three years we've seen a quite serious decline. In that time, the share price dropped 55%. So it's good to see it climbing back up. The rise has some hopeful, but turnarounds are often precarious.
See our latest analysis for Currency Exchange International
Because Currency Exchange International 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years Currency Exchange International saw its revenue shrink by 16% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 16% (annualized) in the same time period. Bagholders or 'baggies' are people who buy more of a stock as the price collapses. They are then left 'holding the bag' if the shares turn out to be worthless. After losing money on a declining business with falling stock price, we always consider whether eager bagholders are still offering us a reasonable exit price.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Currency Exchange International stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Currency Exchange International provided a TSR of 6.7% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 8% endured over half a decade. So this might be a sign the business has turned its fortunes around. 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. Case in point: We've spotted 1 warning sign for Currency Exchange International you should be aware of.