In This Article:
As every investor would know, not every swing hits the sweet spot. But you want to avoid the really big losses like the plague. So spare a thought for the long term shareholders of BRAIN Biotech AG (ETR:BNN); the share price is down a whopping 72% in the last three years. That would be a disturbing experience. And more recent buyers are having a tough time too, with a drop of 32% in the last year. The falls have accelerated recently, with the share price down 17% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
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.
View our latest analysis for BRAIN Biotech
BRAIN Biotech 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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years, BRAIN Biotech saw its revenue grow by 8.4% per year, compound. That's a fairly respectable growth rate. So it seems unlikely the 20% share price drop (each year) is entirely about the revenue. More likely, the market was spooked by the cost of that revenue. If you buy into companies that lose money then you always risk losing money yourself. Just don't lose the lesson.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling BRAIN Biotech stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While the broader market gained around 18% in the last year, BRAIN Biotech shareholders lost 32%. 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 11% 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with BRAIN Biotech , and understanding them should be part of your investment process.