Yahoo Finance Did Business Growth Power Sirona Biochem's (CVE:SBM) Share Price Gain of 208%?
It might be of some concern to shareholders to see the Sirona Biochem Corp. (CVE:SBM) share price down 17% in the last month. But that doesn't detract from the splendid returns of the last year. Indeed, the share price is up an impressive 208% in that time. So we think most shareholders won't be too upset about the recent fall. More important, going forward, is how the business itself is going.
Check out our latest analysis for Sirona Biochem
We don't think Sirona Biochem's revenue of CA$191,278 is enough to establish significant demand. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, they may be hoping that Sirona Biochem comes up with a great new product, before it runs out of money.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Sirona Biochem investors might know.
When it reported in July 2019 Sirona Biochem had minimal cash in excess of all liabilities consider its expenditure: just CA$802k to be specific. So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. It's a testament to the popularity of the business plan that the share price gained 72% in the last year , despite the weak balance sheet. You can click on the image below to see (in greater detail) how Sirona Biochem's cash levels have changed over time. The image below shows how Sirona Biochem's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
It's good to see that Sirona Biochem has rewarded shareholders with a total shareholder return of 208% in the last twelve months. That's better than the annualised return of 20% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 5 warning signs for Sirona Biochem (2 are a bit unpleasant) that you should be aware of.
Sirona Biochem is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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.
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