HomeToGo SE (ETR:HTG) shareholders should be happy to see the share price up 20% in the last quarter. But that doesn't change the reality of under-performance over the last twelve months. In fact, the price has declined 34% in a year, falling short of the returns you could get by investing in an index fund.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Check out our latest analysis for HomeToGo
HomeToGo isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
HomeToGo grew its revenue by 79% over the last year. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 34% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at HomeToGo's financial health with this free report on its balance sheet.
A Different Perspective
HomeToGo shareholders are down 34% for the year, even worse than the market loss of 5.0%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. Putting aside the last twelve months, it's good to see the share price has rebounded by 20%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). It's always interesting to track share price performance over the longer term. But to understand HomeToGo better, we need to consider many other factors. For instance, we've identified 3 warning signs for HomeToGo that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges.