Some Environmental Waste International (CVE:EWS) Shareholders Are Down 42% - Yahoo Finance

Some Environmental Waste International (CVE:EWS) Shareholders Are Down 42% - Yahoo Finance

It's easy to match the overall market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. Unfortunately the Environmental Waste International Inc. (CVE:EWS) share price slid 42% over twelve months. That contrasts poorly with the market return of 12%. On the bright side, the stock is actually up 40% in the last three years. Unfortunately the share price momentum is still quite negative, with prices down 22% in thirty days.

View our latest analysis for Environmental Waste International

We don't think Environmental Waste International's revenue of CA$211,858 is enough to establish significant demand. This state of affairs suggests that venture capitalists won't provide funds on attractive terms. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. Investors will be hoping that Environmental Waste International can make progress and gain better traction for the business, before it runs low on cash.

Companies that lack both meaningful revenue and profits are usually considered high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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).

Our data indicates that Environmental Waste International had CA$5.4m more in total liabilities than it had cash, when it last reported in September 2019. That puts it in the highest risk category, according to our analysis. But since the share price has dived -42% in the last year , it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Environmental Waste International's cash levels have changed over time (click to see the values). You can see in the image below, how Environmental Waste International's cash levels have changed over time (click to see the values).

TSXV:EWS Historical Debt, February 11th 2020

Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? It would bother me, that's for sure. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

A Different Perspective

Environmental Waste International shareholders are down 42% for the year, but the market itself is up 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 2.6% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Environmental Waste International better, we need to consider many other factors. Be aware that Environmental Waste International is showing 3 warning signs in our investment analysis , and 2 of those make us uncomfortable...

But note: Environmental Waste International may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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.

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. Thank you for reading.

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2020-02-11 10:38:00Z
https://finance.yahoo.com/news/environmental-waste-international-cve-ews-103851884.html
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