RE: Interesting nav report from chrysalis22 Aug 2022 09:55
As every investor would know, you don't hit a homerun every time you swing. But serious investors should think long and hard about avoiding extreme losses. So spare a thought for the long term shareholders of THG Plc (LON:THG); the share price is down a whopping 89% in the last twelve months. That'd be enough to make even the strongest stomachs churn. THG hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. The falls have accelerated recently, with the share price down 57% in the last three months. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
With the stock having lost 9.4% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Check out our latest analysis for THG
THG 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. 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.
In the last twelve months, THG increased its revenue by 35%. We think that is pretty nice growth. Unfortunately, the market wanted something better, given it sent the share price 89% lower during the year. It could be that the losses are too much for investors to handle without losing their nerve. We'd posit that the future looks challenging, given the disconnect between revenue growth and the share price.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
earnings-and-revenue-growth
LSE:THG Earnings and Revenue Growth August 20th 2022
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We doubt THG shareholders are happy with the loss of 89% over twelve months. That falls short of the market, which lost 3.6%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. The share price decline has continued throughout the most recent three months, down 57%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand THG better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for THG you should be aware of, and 1 of them shouldn't be ignored.
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