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Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by G Medical Innovations Holdings Ltd (ASX:GMV) shareholders over the last year, as the share price declined 14%. That's well bellow the market return of 8.5%. G Medical Innovations Holdings may have better days ahead, of course; we've only looked at a one year period. It's down 25% in about a quarter.
See our latest analysis for G Medical Innovations Holdings
Given that G Medical Innovations Holdings didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong 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.
G Medical Innovations Holdings grew its revenue by 2709% over the last year. That's a strong result which is better than most other loss making companies. The share price drop of 14% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on G Medical Innovations Holdings's earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 8.5% in the last year, G Medical Innovations Holdings shareholders might be miffed that they lost 14%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. Notably, the loss over the last year isn't as bad as the 25% drop in the last three months. This probably signals that the business has recently disappointed shareholders - it will take time to win them back. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.