It is a pleasure to report that the Eos Energy Enterprises, Inc. (NASDAQ:EOSE) is up 41% in the last quarter. But that doesn't change the fact that the returns over the last year have been stomach churning. During that time the share price has plummeted like a stone, down 85%. It's not uncommon to see a bounce after a drop like that. The important thing is whether the company can turn it around, longer term. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
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 Eos Energy Enterprises
Because Eos Energy Enterprises made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Eos Energy Enterprises grew its revenue by 1,208% over the last year. That's a strong result which is better than most other loss making companies. So the hefty 85% share price crash makes us think the company has somehow offended market participants. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. We'd recommend taking a very close look at the stock (and any available forecasts), before considering a purchase, because the share price is not correlated with the revenue growth, that's for sure. Of course, investors do over-react when they are stressed out, so the sell-off could be unjustifiably severe.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Eos Energy Enterprises stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Eos Energy Enterprises shareholders are down 85% for the year, even worse than the market loss of 17%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. Putting aside the last twelve months, it's good to see the share price has rebounded by 41%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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. For example, we've discovered 5 warning signs for Eos Energy Enterprises (3 make us uncomfortable!) that you should be aware of before investing here.