This week we saw the Vapiano SE (ETR:VAO) share price climb by 26%. But that hardly compensates for the shocking decline over the last twelve months. To wit, the stock has dropped 72% over the last year. Arguably, the recent bounce is to be expected after such a bad drop. The real question is whether the company can turn around its fortunes.
Because Vapiano is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last twelve months, Vapiano increased its revenue by 14%. While that may seem decent it isn't great considering the company is still making a loss. Nonetheless, it's fair to say the 72% share price implosion is unexpected.. Clearly the market was expecting better, and this may blow out projections of profitability. But if it will make money, albeit later than previously believed, this could be an opportunity.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We doubt Vapiano shareholders are happy with the loss of 72% over twelve months. That falls short of the market, which lost 9.0%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 18% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
We will like Vapiano better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on DE exchanges.
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