Strong week for Ocado Group5 Jul 2023 08:47
Strong week for Ocado Group (LON:OCDO) shareholders doesn't alleviate pain of three-year loss
https://simplywall.st/stocks/gb/consumer-retailing/lse-ocdo/ocado-group-shares/news/strong-week-for-ocado-group-lonocdo-shareholders-doesnt-alle
" Ocado Group 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over three years, Ocado Group grew revenue at 10% per year. That's a fairly respectable growth rate. So some shareholders would be frustrated with the compound loss of 19% per year. To be frank we're surprised to see revenue growth and share price growth diverge so strongly. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength). ...."
"A Different Perspective
Investors in Ocado Group had a tough year, with a total loss of 24%, against a market gain of about 6.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Ocado Group (of which 1 can't be ignored!) you should know about. "
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