Sarine Technologies Ltd’s Stock Is Down By 11.2% In The Last 30 Days: Here’s Why

Sarine Technologies Ltd (SGX: U77) is an Israel-based company that develops technological products that are used for the processing of rough diamonds and gemstones into the polished stones you see in jewellery shops. The company has products that cater to every stage of the diamond manufacturing process.

Over the last 30 days, Sarine Technologies’ stock price has declined by 11.2%. What may have caused this?

Reasons for a decline

There can be many reasons behind a stock’s price decline.

But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related. The former deals with how a stock’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the stock’s profits.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The case with Sarine Technologies

In Sarine Technologies’ case, I believe it’s the former at work. Here’s the company’s income statement for the first quarters of 2017 and 2016:

Source: Sarine Technologies’ 2017 first quarter earnings

We can see that the company’s profit declined by 17.3% in the first quarter of 2017 despite a 5.1% increase in revenue. Sarine Technologies’ bottom-line suffered from higher expense growth that came off the back of new service launches and an appreciation of the Israeli new shekel against the US dollar.

Going forward, Sarine Technologies expects the diamond market to continue to be positive throughout 2017. The company also expects growth from its new product lines during the year, such as Sarine Profile.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.