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The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the last three years have been particularly tough on longer term Seeing Machines Limited (LON:SEE) shareholders. Sadly for them, the share price is down 55% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 26% lower in that time. Even worse, it's down 13% in about a month, which isn't fun at all.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
View our latest analysis for Seeing Machines
Seeing Machines wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over three years, Seeing Machines grew revenue at 24% per year. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 16% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. When we see revenue growth, paired with a falling share price, we can't help wonder if there is an opportunity for those who are willing to dig deeper.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So it makes a lot of sense to check out what analysts think Seeing Machines will earn in the future (free profit forecasts).
A Different Perspective
Investors in Seeing Machines had a tough year, with a total loss of 26%, against a market gain of about 17%. 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 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 Seeing Machines better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Seeing Machines you should know about.