Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7385
    +0.0013 (+0.18%)
     
  • CRUDE OIL

    83.04
    +1.69 (+2.08%)
     
  • Bitcoin CAD

    95,774.18
    +2,484.05 (+2.66%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,244.70
    +32.00 (+1.45%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ

    16,379.46
    -20.06 (-0.12%)
     
  • VOLATILITY

    13.01
    +0.23 (+1.80%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6844
    +0.0039 (+0.57%)
     

If You Had Bought Evrim Resources (CVE:EVM) Stock A Year Ago, You'd Be Sitting On A 68% Loss, Today

While it may not be enough for some shareholders, we think it is good to see the Evrim Resources Corp. (CVE:EVM) share price up 21% in a single quarter. But that's not enough to compensate for the decline over the last twelve months. Like an arid lake in a warming world, shareholder value has evaporated, with the share price down 68% in that time. Some might say the recent bounce is to be expected after such a bad drop. It may be that the fall was an overreaction.

See our latest analysis for Evrim Resources

With just CA$274,984 worth of revenue in twelve months, we don't think the market considers Evrim Resources to have proven its business plan. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Evrim Resources will find or develop a valuable new mine before too long.

ADVERTISEMENT

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Some Evrim Resources investors have already had a taste of the bitterness stocks like this can leave in the mouth.

When it last reported its balance sheet in March 2019, Evrim Resources had cash in excess of all liabilities of CA$11m. That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price down 68% in the last year, it seems likely that the need for cash is weighing on investors' minds. You can see in the image below, how Evrim Resources's cash levels have changed over time (click to see the values). You can click on the image below to see (in greater detail) how Evrim Resources's cash levels have changed over time.

TSXV:EVM Historical Debt, August 23rd 2019
TSXV:EVM Historical Debt, August 23rd 2019

Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

While the broader market lost about 1.7% in the twelve months, Evrim Resources shareholders did even worse, losing 68%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 2.1%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before spending more time on Evrim Resources it might be wise to click here to see if insiders have been buying or selling shares.

Of course Evrim Resources may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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.

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. Thank you for reading.