Yahoo Finance Imagine Owning CommsChoice Group (ASX:CCG) And Wondering If The 36% Share Price Slide Is Justified
Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by CommsChoice Group Limited (ASX:CCG) shareholders over the last year, as the share price declined 36%. That's disappointing when you consider the market returned 13%. We wouldn't rush to judgement on CommsChoice Group because we don't have a long term history to look at. But it's up 6.8% in the last week. Less than a week ago CommsChoice Group announced its financial results; you can catch up on the most recent data by reading our company report.
See our latest analysis for CommsChoice Group
Given that CommsChoice Group didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year CommsChoice Group saw its revenue fall by 0.6%. That's not what investors generally want to see. Shareholders have seen the share price drop 36% in that time. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on CommsChoice Group's earnings, revenue and cash flow.
A Different Perspective
Given that the market gained 13% in the last year, CommsChoice Group shareholders might be miffed that they lost 36%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 10.0% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 5 warning signs we've spotted with CommsChoice Group (including 3 which is make us uncomfortable) .
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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.
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. Thank you for reading.
