It is a pleasure to report that the The Brand House Collective, Inc. (NASDAQ:TBHC) is up 87% in the last quarter. But spare a thought for the long term holders, who have held the stock as it bled value over the last five years. Like a ship taking on water, the share price has sunk 72% in that time. The recent bounce might mean the long decline is over, but we are not confident. The million dollar question is whether the company can justify a long term recovery.
While the stock has risen 38% in the past week but long term shareholders are still in the red, let’s see what the fundamentals can tell us.
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Brand House Collective 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. 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 five years Brand House Collective saw its revenue shrink by 5.8% per year. While far from catastrophic that is not good. The share price fall of 11% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. We’re generally averse to companies with declining revenues, but we’re not alone in that. Fear of becoming a ‘bagholder’ may be keeping people away from this stock.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Brand House Collective’s balance sheet strength is a great place to start, if you want to investigate the stock further.
It’s good to see that Brand House Collective has rewarded shareholders with a total shareholder return of 23% in the last twelve months. Notably the five-year annualised TSR loss of 11% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It’s always interesting to track share price performance over the longer term. But to understand Brand House Collective better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we’ve spotted with Brand House Collective (including 3 which don’t sit too well with us) .