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The last three months have been tough on ELQ S.A. (WSE:ELQ) shareholders, who have seen the share price decline a rather worrying 32%. But that doesn't change the fact that the returns over the last year have been very strong. We're very pleased to report the share price shot up 150% in that time. So it may be that the share price is simply cooling off after a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.
Check out our latest analysis for ELQ
With just zł2,858,229 worth of revenue in twelve months, we don't think the market considers ELQ to have proven its business plan. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that ELQ can make progress and gain better traction for the business, before it runs low on cash.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as ELQ investors might know.
Our data indicates that ELQ had zł21,580,283 more in total liabilities than it had cash, when it last reported in December 2018. That makes it extremely high risk, in our view. So we're surprised to see the stock up 150% in the last year, but we're happy for holders. Investors must really like its potential. You can see in the image below, how ELQ's cash levels have changed over time (click to see the values).
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. However you can take a look at whether insiders have been buying up shares. It's often positive if so, assuming the buying is sustained and meaningful. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
We're pleased to report that ELQ shareholders have received a total shareholder return of 150% over one year. There's no doubt those recent returns are much better than the TSR loss of 3.6% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.