Investors can approximate the average market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Unfortunately the iCollege Limited (ASX:ICT) share price slid 13% over twelve months. That contrasts poorly with the market return of 8.9%. We wouldn’t rush to judgement on iCollege because we don’t have a long term history to look at. In the last ninety days we’ve seen the share price slide 14%. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
Check out our latest analysis for iCollege
iCollege isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year iCollege saw its revenue grow by 122%. That’s well above most other pre-profit companies. The share price drop of 13% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. 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.
Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on iCollege’s earnings, revenue and cash flow.
A Different Perspective
While iCollege shareholders are down 13% for the year, the market itself is up 8.9%. 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. It’s worth noting that the last three months did the real damage, with a 14% decline. So it seems like some holders have been dumping the stock of late – and that’s not bullish. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.