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Investing in stocks comes with the risk that the share price will fall. Anyone who held eBroker Group Limited (HKG:8036) over the last year knows what a loser feels like. The share price is down a hefty 51% in that time. eBroker Group may have better days ahead, of course; we've only looked at a one year period. Furthermore, it's down 41% in about a quarter. That's not much fun for holders. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
See our latest analysis for eBroker Group
While eBroker Group made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In just one year eBroker Group saw its revenue fall by 17%. That looks pretty grim, at a glance. In the absence of profits, it's not unreasonable that the share price fell 51%. Fingers crossed this is the low ebb for the stock. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on eBroker Group's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
eBroker Group shareholders are down 51% for the year, even worse than the market loss of 18%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 41%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for eBroker Group (1 is a bit unpleasant) that you should be aware of.
We will like eBroker Group better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.