If You Had Bought Avecho Biotechnology (ASX:AVE) Stock Five Years Ago, You'd Be Sitting On A 94% Loss, Today
Long term investing works well, but it doesn't always work for each individual stock. It hits us in the gut when we see fellow investors suffer a loss. For example, we sympathize with anyone who was caught holding Avecho Biotechnology Limited (ASX:AVE) during the five years that saw its share price drop a whopping 94%. On top of that, the share price has dropped a further 33% in a month.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
See our latest analysis for Avecho Biotechnology
We don't think that Avecho Biotechnology's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over five years, Avecho Biotechnology grew its revenue at 6.2% per year. That's a fairly respectable growth rate. So the stock price fall of 44% per year seems pretty steep. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Avecho Biotechnology's financial health with this free report on its balance sheet.
A Different Perspective
We're pleased to report that Avecho Biotechnology shareholders have received a total shareholder return of 33% over one year. That certainly beats the loss of about 43% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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.
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.
