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Investing in stocks comes with the risk that the share price will fall. Anyone who held Prime Focus Limited (NSE:PFOCUS) over the last year knows what a loser feels like. The share price has slid 57% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 50% lower than three years ago). The falls have accelerated recently, with the share price down 44% in the last three months. This could be related to the recent financial results - you can catch up on the most recent data by reading our company report.
See our latest analysis for Prime Focus
Prime Focus isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Prime Focus grew its revenue by 10% over the last year. That's not a very high growth rate considering it doesn't make profits. Without profits, and with revenue growth sluggish, you get a 57% loss for shareholders, over the year. Like many holders, we really want to see better revenue growth in companies that lose money. Of course, the market can be too impatient at times. Why not take a closer look at this one so you're ready to pounce if growth does accelerate.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We regret to report that Prime Focus shareholders are down 57% for the year. Unfortunately, that's worse than the broader market decline of 13%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6.1% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. You could get a better understanding of Prime Focus's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.