It is a pleasure to report that the Hill Street Beverage Company Inc. (CVE:BEER) is up 36% in the last quarter. But that doesn't change the fact that the returns over the last year have been disappointing. Specifically, the stock price slipped by 63% in that time. It's not that amazing to see a bounce after a drop like that. Of course, it could be that the fall was overdone.
Hill Street Beverage 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Hill Street Beverage grew its revenue by 11% over the last year. That's not a very high growth rate considering it doesn't make profits. Without profits, and with revenue growth sluggish, you get a 63% loss for shareholders, over the year. We'd want to see evidence that future revenue growth will be stronger before getting too interested. Of course, the market can be too impatient at times. Why not take a closer look at this one so you're ready to pounce if growth does accelerate.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Hill Street Beverage's earnings, revenue and cash flow.
A Different Perspective
We doubt Hill Street Beverage shareholders are happy with the loss of 63% over twelve months. That falls short of the market, which lost 0.8%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. It's great to see a nice little 36% 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. Case in point: We've spotted 7 warning signs for Hill Street Beverage you should be aware of, and 3 of them don't sit too well with us.
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.
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