home24 SE (ETR:H24) shareholders should be happy to see the share price up 12% in the last month. But that is meagre solace when you consider how the price has plummeted over the last year. During that time the share price has plummeted like a stone, down 85%. So the rise may not be much consolation. The bigger issue is whether the company can sustain the momentum in the long term.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
View our latest analysis for home24
Given that home24 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
home24 grew its revenue by 15% over the last year. That's definitely a respectable growth rate. However, it seems like the market wanted more, since the share price is down 85%. One fear might be that the company might be losing too much money and will need to raise more. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
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
We doubt home24 shareholders are happy with the loss of 85% over twelve months. That falls short of the market, which lost 0.5%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. With the stock down 15% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.
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