Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by Ultra Wiring Connectivity System Limited (NSE:UWCSL) shareholders over the last year, as the share price declined 39%. That's disappointing when you consider the market returned 9.8%. Because Ultra Wiring Connectivity System hasn't been listed for many years, the market is still learning about how the business performs. Shareholders have had an even rougher run lately, with the share price down 27% in the last 90 days.
Check out our latest analysis for Ultra Wiring Connectivity System
Given that Ultra Wiring Connectivity System only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. 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 twelve months, Ultra Wiring Connectivity System increased its revenue by 12%. While that may seem decent it isn't great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 39% in a year. In a hot market it's easy to forget growth is the life-blood of a loss making company. But if you buy a loss making company then you could become a loss making investor.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Ultra Wiring Connectivity System's financial health with this free report on its balance sheet.
A Different Perspective
Given that the market gained 9.8% in the last year, Ultra Wiring Connectivity System shareholders might be miffed that they lost 39% (even including dividends) . While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 27%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Before forming an opinion on Ultra Wiring Connectivity System you might want to consider these 3 valuation metrics.