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Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. Zooming in on an example, the Network18 Media & Investments Limited (NSE:NETWORK18) share price dropped 54% in the last half decade. We certainly feel for shareholders who bought near the top. And it's not just long term holders hurting, because the stock is down 38% in the last year. Shareholders have had an even rougher run lately, with the share price down 20% in the last 90 days.
See our latest analysis for Network18 Media & Investments
Because Network18 Media & Investments is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over five years, Network18 Media & Investments grew its revenue at 2.3% per year. That's not a very high growth rate considering it doesn't make profits. This lacklustre growth has no doubt fueled the loss of 15% per year, in that time. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Network18 Media & Investments. However, it's possible too many in the market will ignore it, and there may be an opportunity if it starts to recover down the track.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
Take a more thorough look at Network18 Media & Investments's financial health with this free report on its balance sheet.
A Different Perspective
While the broader market gained around 0.2% in the last year, Network18 Media & Investments shareholders lost 38%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 15% over the last half decade. 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. You could get a better understanding of Network18 Media & Investments's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.