New Tech Venture SA (WSE: NTV) Shareholders should be happy to see the stock price rise 19% last month. But the truth is, the past year has not been a good year for the stock price. In fact, the stock has lost 58% in the past year, well below market performance.
On a more encouraging note, the company added Z 342,000 to its market cap in the past 7 days alone. So let’s see if we can figure out what caused the loss of a year for shareholders.
Check out our latest review for New Tech Venture
New Tech Venture is currently unprofitable, so most analysts would look to revenue growth to get a sense of how fast the underlying business is growing. When a business is not making a profit, we generally expect good revenue growth. Some companies are ready to postpone profitability to increase their revenue faster, but in this case, good revenue growth is expected.
New Tech Venture increased its revenue by 5.8% in the past year. It is not a very high growth rate since it does not make a profit. It is likely that this subdued growth has contributed to the 58% drop in the stock price over the past year. We would like to see evidence that future income growth will be stronger before we get too interested in it. Of course, the market can sometimes be too impatient. Why not take a closer look at this one to be ready to pounce if growth picks up.
The graph below illustrates the evolution of earnings and income over time (reveal the exact values by clicking on the image).
If you are thinking of buying or selling shares of New Tech Venture, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We would be remiss not to mention the difference between New Tech Venture total shareholder return (TSR) and its share price return. Arguably, TSR is a more comprehensive return calculation because it takes into account the value of dividends (as if they were reinvested), as well as the hypothetical value of any discounted capital that has been offered to shareholders. New Tech Venture did not pay dividends, but its TSR of -3.4% exceeds its share price return by -58%, implying that it has either sold a company or raised capital with it. a discount; thus providing added value to shareholders.
A different perspective
New Tech Venture investors had a rough year, with a total loss of 3.4%, compared to a market gain of around 17%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer-term investors would not be so upset, as they would have gained 4% each year over five years. The recent sell-off may be an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. I find it very interesting to look at the stock price over the long term as an indicator of company performance. But to really understand better, we have to take other information into account as well. Consider, for example, the ever-present specter of investment risk. We have identified 4 warning signs with New Tech Venture (at least 2 that make us uncomfortable), and understanding them should be part of your investment process.
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Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks that currently trade on the PL exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.