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Even the best stock pickers will make plenty of bad investments. And there's no doubt that Andrada Mining Limited (LON:ATM) stock has had a really bad year. In that relatively short period, the share price has plunged 55%. We note that it has not been easy for shareholders over three years, either; the share price is down 52% in that time. Shareholders have had an even rougher run lately, with the share price down 30% in the last 90 days.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Andrada Mining
Andrada Mining 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 hope to see good 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.
In the last year Andrada Mining saw its revenue grow by 83%. That's well above most other pre-profit companies. In contrast the share price is down 55% over twelve months. Yes, the market can be a fickle mistress. This could mean hype has come out of the stock because the bottom line is concerning investors. Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Andrada Mining's financial health with this free report on its balance sheet.
A Different Perspective
Investors in Andrada Mining had a tough year, with a total loss of 55%, against a market gain of about 11%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Andrada Mining you should be aware of.