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Imagine Owning RightCrowd (ASX:RCW) And Wondering If The 36% Share Price Slide Is Justified

The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the RightCrowd Limited (ASX:RCW) share price slid 36% over twelve months. That's well bellow the market return of 11%. RightCrowd may have better days ahead, of course; we've only looked at a one year period. It's down 1.6% in the last seven days.

View our latest analysis for RightCrowd

RightCrowd isn't a profitable company, so 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 expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

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In the last twelve months, RightCrowd increased its revenue by 36%. We think that is pretty nice growth. Unfortunately that wasn't good enough to stop the share price dropping 36%. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

ASX:RCW Income Statement, April 18th 2019
ASX:RCW Income Statement, April 18th 2019

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Given that the market gained 11% in the last year, RightCrowd shareholders might be miffed that they lost 36%. 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. The share price decline has continued throughout the most recent three months, down 7.6%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. If you would like to research RightCrowd in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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.