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Over the last month the Alexium International Group Limited (ASX:AJX) has been much stronger than before, rebounding by 46%. But that doesn't change the fact that the returns over the last three years have been stomach churning. To wit, the share price sky-dived 76% in that time. So it's about time shareholders saw some gains. The thing to think about is whether the business has really turned around.
Alexium International Group 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last three years, Alexium International Group saw its revenue grow by 34% per year, compound. That's well above most other pre-profit companies. So why has the share priced crashed 37% per year, in the same time? You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. If the company is low on cash, it may have to raise capital soon.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Alexium International Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Alexium International Group has rewarded shareholders with a total shareholder return of 35% in the last twelve months. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.