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Reflecting on Horizon Oil's (ASX:HZN) Share Price Returns Over The Last Year

Horizon Oil Limited (ASX:HZN) shareholders should be happy to see the share price up 23% in the last quarter. But that is minimal compensation for the share price under-performance over the last year. In fact the stock is down 41% in the last year, well below the market return.

View our latest analysis for Horizon Oil

Because Horizon Oil 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Horizon Oil's revenue didn't grow at all in the last year. In fact, it fell 31%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 41% in that time. What would you expect when revenue is falling, and it doesn't make a profit? We think most holders must believe revenue growth will improve, or else costs will decline.

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The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

This free interactive report on Horizon Oil's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 1.7% in the last year, Horizon Oil shareholders lost 41%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 0.3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Horizon Oil better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Horizon Oil you should know about.

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.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.