Such Is Life: How Solutions Capital Management SIM (BIT:SCM) Shareholders Saw Their Shares Drop 62%
Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term Solutions Capital Management SIM S.p.A. (BIT:SCM) shareholders. So they might be feeling emotional about the 62% share price collapse, in that time. The more recent news is of little comfort, with the share price down 38% in a year.
Check out our latest analysis for Solutions Capital Management SIM
Because Solutions Capital Management SIM made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over three years, Solutions Capital Management SIM grew revenue at 0.9% per year. That's not a very high growth rate considering it doesn't make profits. It's likely this weak growth has contributed to an annualised return of 27% for the last three years. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn't easy, and the process will not always be smooth.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Solutions Capital Management SIM shareholders are down 38% for the year, falling short of the market return. Meanwhile, the broader market slid about 21%, likely weighing on the stock. Shareholders have lost 27% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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 4 warning signs for Solutions Capital Management SIM (2 are a bit unpleasant!) that you should be aware of before investing here.
Of course Solutions Capital Management SIM may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IT 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.
