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Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Southern Alliance Mining Ltd. (Catalist:QNS) share price is up 14% in the last 1 year, clearly besting the market decline of around 4.9% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow Southern Alliance Mining for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.
View our latest analysis for Southern Alliance Mining
Southern Alliance Mining wasn't profitable in the last twelve months, 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
Southern Alliance Mining actually shrunk its revenue over the last year, with a reduction of 60%. Despite the lack of revenue growth, the stock has returned a solid 14% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Southern Alliance Mining's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Southern Alliance Mining shareholders have gained 15% over the last year, including dividends. And the share price momentum remains respectable, with a gain of 32% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. 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. Take risks, for example - Southern Alliance Mining has 2 warning signs (and 1 which is a bit concerning) we think you should know about.