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As every investor would know, not every swing hits the sweet spot. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of Surana Solar Limited (NSE:SURANASOL) investors who have held the stock for three years as it declined a whopping 76%. That would be a disturbing experience. It's down 4.1% in the last seven days.
Check out our latest analysis for Surana Solar
We don't think that Surana Solar's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last three years Surana Solar saw its revenue shrink by 47% per year. That means its revenue trend is very weak compared to other loss making companies. And as you might expect the share price has been weak too, dropping at a rate of 37% per year. Never forget that loss making companies with falling revenue can and do cause losses for everyday investors. It's worth remembering that investors call buying a steeply falling share price 'catching a falling knife' because it is a dangerous pass time.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Surana Solar stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
The last twelve months weren't great for Surana Solar shares, which performed worse than the market, costing holders 18%. The market shed around 1.6%, no doubt weighing on the stock price. Unfortunately, the longer term story isn't pretty, with investment losses running at 37% per year over three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Before spending more time on Surana Solar it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN 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.