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SoftBlue SA (WSE:SBE) shareholders should be happy to see the share price up 14% in the last week. But that doesn't change the fact that the returns over the last three years have been stomach churning. To wit, the share price sky-dived 80% in that time. So it's about time shareholders saw some gains. Only time will tell if the company can sustain the turnaround.
View our latest analysis for SoftBlue
SoftBlue isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over three years, SoftBlue grew revenue at 33% per year. That is faster than most pre-profit companies. So on the face of it we're really surprised to see the share price down 42% a year in the same time period. The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. Unless the balance sheet is strong, the company might have to raise capital.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
The last twelve months weren't great for SoftBlue shares, which performed worse than the market, costing holders 38%. The market shed around 3.7%, no doubt weighing on the stock price. However, the loss over the last year isn't as bad as the 41% per annum loss investors have suffered over the last three years. We'd need clear signs of growth in the underlying business before we could muster much enthusiasm for this one. You could get a better understanding of SoftBlue's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on PL exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.