IODM (ASX:IOD) shareholders have endured a 54% loss from investing in the stock three years ago

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Investing in stocks inevitably means buying into some companies that perform poorly. But long term IODM Limited (ASX:IOD) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 54% share price collapse, in that time. And over the last year the share price fell 43%, so we doubt many shareholders are delighted.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for IODM

Given that IODM 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. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Over three years, IODM grew revenue at 28% per year. That's well above most other pre-profit companies. In contrast, the share price is down 15% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
ASX:IOD Earnings and Revenue Growth January 16th 2025

Take a more thorough look at IODM's financial health with this free report on its balance sheet.

A Different Perspective

IODM shareholders are down 43% for the year, but the market itself is up 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.2% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand IODM better, we need to consider many other factors. For example, we've discovered 4 warning signs for IODM (2 shouldn't be ignored!) that you should be aware of before investing here.

We will like IODM better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.