Sonovia (TLV: SONO) at a loss has seen earnings and shareholder returns follow the same downward trajectory in the past -24%

While not a mind-boggling decision, it’s good to see that the Sonovia Ltd. The share price (TLV: SONO) has gained 21% over the past three months. But that doesn’t change the fact that the returns over the past year have been less than pleasant. In fact, the price has fallen 24% in one year, below the returns you could get by investing in an index fund.

While the past week has been more reassuring for shareholders, they are still in the red from last year, so let’s see if underlying activity is responsible for the decline.

Check out our latest analysis for Sonovia

Since Sonovia has not made a profit in the past twelve months, we will focus on revenue growth to get a quick view of its business development. Shareholders of unprofitable companies generally expect strong revenue growth. As you can imagine, rapid revenue growth, when sustained, often leads to rapid profit growth.

Over the past twelve months, Sonovia has increased its turnover by 682%. This is way above most other nonprofits. The 24% year-over-year drop in the stock price would be seen by many as disappointing, so you could say the company is getting little credit for the impressive revenue growth. At first glance, such income growth should be a good thing, so it is worth checking whether the losses have stabilized. Our brains have evolved to think linearly, so learning to recognize exponential growth is helpful. We are, in some ways, simply the wisest of monkeys.

The company’s revenue and profits (over time) are shown in the image below (click to see exact numbers).

If you are thinking of buying or selling shares of Sonovia, you should check this out FREE detailed report on its balance sheet.

A different perspective

Given that the market gained 42% last year, Sonovia shareholders might be sorry they lost 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Aside from the past twelve months, it’s good to see that the stock price has rebounded 21%, over the past ninety days. Let’s just hope this isn’t the dreaded “dead cat rebound” (which would point to more lows to come). It is always interesting to follow the evolution of stock prices over the long term. But in order to better understand Sonovia, there are many other factors that we need to take into account. Take risks, for example – Sonovia has 1 warning sign we think you should be aware.

Sure Sonovia might not be the best stock to buy. So you might want to see this free collection of growth stocks.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the IL stock exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.