Such Is Life: How Hillcrest Petroleum (CVE:HRH) Shareholders Saw Their Shares Drop 58%
Hillcrest Petroleum Ltd. (CVE:HRH) shareholders should be happy to see the share price up 25% in the last month. But that is little comfort to those holding over the last half decade, sitting on a big loss. Indeed, the share price is down 58% in the period. So is the recent increase sufficient to restore confidence in the stock? Not yet. We'd err towards caution given the long term under-performance.
Check out our latest analysis for Hillcrest Petroleum
We don't think Hillcrest Petroleum's revenue of CA$524,462 is enough to establish significant demand. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Hillcrest Petroleum will discover or develop fossil fuel before too long.
Companies that lack both meaningful revenue and profits are usually considered 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Hillcrest Petroleum has already given some investors a taste of the bitter losses that high risk investing can cause.
Hillcrest Petroleum had liabilities exceeding cash by CA$4.6m when it last reported in September 2019, according to our data. That makes it extremely high risk, in our view. But with the share price diving 16% per year, over 5 years , it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Hillcrest Petroleum's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Hillcrest Petroleum'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. What if insiders are ditching the stock hand over fist? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
Hillcrest Petroleum shareholders are down 29% for the year, but the market itself is up 12%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 16% 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. Before spending more time on Hillcrest Petroleum it might be wise to click here to see if insiders have been buying or selling shares.
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 CA 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.
