The past one-year earnings decline for Coventry Group (ASX:CYG) likely explains shareholders long-term losses

Simply Wall St · 07/02 22:22

This week we saw the Coventry Group Ltd (ASX:CYG) share price climb by 11%. But in truth the last year hasn't been good for the share price. In fact, the price has declined 39% in a year, falling short of the returns you could get by investing in an index fund.

On a more encouraging note the company has added AU$9.5m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.

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While Coventry Group made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year Coventry Group saw its revenue grow by 0.4%. While that may seem decent it isn't great considering the company is still making a loss. Given this fairly low revenue growth (and lack of profits), it's not particularly surprising to see the stock down 39% in a year. It's important not to lose sight of the fact that profitless companies must grow. So remember, if you buy a profitless company then you risk being a profitless investor.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
ASX:CYG Earnings and Revenue Growth July 2nd 2025

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Dive deeper into the earnings by checking this interactive graph of Coventry Group's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 13% in the last year, Coventry Group shareholders lost 37% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 9%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Coventry Group that you should be aware of.

Coventry Group is not the only stock that insiders are buying. For those who like to find lesser know companies 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 Australian exchanges.