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Volatility 101: Should Cimco Marine (STO:OXE) Shares Have Dropped 38%?

Cimco Marine AB (publ) (STO:OXE) shareholders should be happy to see the share price up 17% in the last month. But in truth the last year hasn't been good for the share price. The cold reality is that the stock has dropped 38% in one year, under-performing the market.

Check out our latest analysis for Cimco Marine

Cimco Marine 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last twelve months, Cimco Marine increased its revenue by 33%. We think that is pretty nice growth. Unfortunately that wasn't good enough to stop the share price dropping 38%. You might even wonder if the share price was previously over-hyped. But if revenue keeps growing, then at a certain point the share price would likely follow.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

OM:OXE Income Statement, February 24th 2020
OM:OXE Income Statement, February 24th 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Given that the market gained 27% in the last year, Cimco Marine shareholders might be miffed that they lost 38%. 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 great to see a nice little 7.4% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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 - Cimco Marine has 4 warning signs (and 1 which can't be ignored) we think you should know about.

But note: Cimco Marine may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on SE exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.