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It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the Fayenceries de Sarreguemines, Digoin & Vitry-le-Francois Société Anonyme (EPA:FAYE) share price slid 22% over twelve months. That's disappointing when you consider the market returned 5.3%. Even if shareholders bought some time ago, they wouldn't be particularly happy: the stock is down 19% in three years. On top of that, the share price has dropped a further 14% in a month. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
View our latest analysis for Fayenceries de Sarreguemines Digoin & Vitry-le-Francois Société Anonyme
Fayenceries de Sarreguemines Digoin & Vitry-le-Francois Société Anonyme didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? 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 Fayenceries de Sarreguemines Digoin & Vitry-le-Francois Société Anonyme 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 such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized).
Fayenceries de Sarreguemines Digoin & Vitry-le-Francois Société Anonyme has plenty of cash in the bank, with cash in excess of all liabilities sitting at €3.6m, when it last reported (September 2018). This gives management the flexibility to drive business growth, without worrying too much about cash reserves. But since the share price has dropped 22% in the last year, it seems like the market might have been over-excited previously. You can click on the image below to see (in greater detail) how Fayenceries de Sarreguemines Digoin & Vitry-le-Francois Société Anonyme's cash levels have changed over time.