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Did Changing Sentiment Drive Spectur’s (ASX:SP3) Share Price Down A Worrying 56%?

Simply Wall St

The nature of investing is that you win some, and you lose some. Unfortunately, shareholders of Spectur Limited (ASX:SP3) have suffered share price declines over the last year. The share price has slid 56% in that time. Because Spectur hasn’t been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

See our latest analysis for Spectur

Because Spectur is loss-making, 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Spectur grew its revenue by 110% over the last year. That’s a strong result which is better than most other loss making companies. Meanwhile, the share price slid 56%. This could mean hype has come out of the stock because the bottom line is concerning investors. We’d definitely consider it a positive if the company is trending towards profitability. If you can see that happening, then perhaps consider adding this stock to your watchlist.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

ASX:SP3 Income Statement, March 18th 2019

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

A Different Perspective

While Spectur shareholders are down 56% for the year, the market itself is up 8.0%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 25% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.