Yahoo Finance Those Who Purchased Fe (ASX:FEL) Shares Three Years Ago Have A 68% Loss To Show For It
The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Fe Limited (ASX:FEL) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 68% drop in the share price over that period. The more recent news is of little comfort, with the share price down 38% in a year. Furthermore, it's down 29% in about a quarter. That's not much fun for holders. Of course, this share price action may well have been influenced by the 28% decline in the broader market, throughout the period.
Check out our latest analysis for Fe
Fe recorded just AU$1,829,354 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, investors may be hoping that Fe finds some valuable resources, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Fe has already given some investors a taste of the bitter losses that high risk investing can cause.
When it last reported its balance sheet in December 2019, Fe had cash in excess of all liabilities of AU$726k. That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price down 31% per year, over 3 years , it seems likely that the need for cash is weighing on investors' minds. The image below shows how Fe's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. You can click here to see if there are insiders selling.
A Different Perspective
We regret to report that Fe shareholders are down 38% for the year. Unfortunately, that's worse than the broader market decline of 17%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5.1% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 6 warning signs for Fe (2 don't sit too well with us!) that you should be aware of before investing here.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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.
