Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in BioHiTech Global, Inc. (NASDAQ:BHTG) have tasted that bitter downside in the last year, as the share price dropped 48%. That's well bellow the market return of 1.9%. Notably, shareholders had a tough run over the longer term, too, with a drop of 45% in the last three years. Even worse, it's down 20% in about a month, which isn't fun at all.
View our latest analysis for BioHiTech Global
BioHiTech Global isn't a profitable company, so 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year BioHiTech Global saw its revenue grow by 27%. That's definitely a respectable growth rate. Meanwhile, the share price is down 48% over twelve months, which is disappointing given the progress made. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
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
BioHiTech Global shareholders are down 48% for the year, but the broader market is up 1.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The three-year loss of 18% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.