It's been a soft week for Condor Energies Inc. (TSE:CDR) shares, which are down 12%. But that doesn't change the fact that the returns over the last half decade have been spectacular. In fact, during that period, the share price climbed 876%. Impressive! Arguably, the recent fall is to be expected after such a strong rise. The most important thing for savvy investors to consider is whether the underlying business can justify the share price gain. We love happy stories like this one. The company should be really proud of that performance!

Since the long term performance has been good but there's been a recent pullback of 12%, let's check if the fundamentals match the share price.

View our latest analysis for Condor Energies

With just CA$1,479,000 worth of revenue in twelve months, we don't think the market considers Condor Energies to have proven its business plan. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that Condor Energies finds fossil fuels with an exploration program, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty 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 to raise equity. 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). Of course, if you time it right, high risk investments like this can really pay off, as Condor Energies investors might know.

Our data indicates that Condor Energies had CA$1.5m more in total liabilities than it had cash, when it last reported in September 2023. That makes it extremely high risk, in our view. So we're surprised to see the stock up 30% per year, over 5 years , but we're happy for holders. It's clear more than a few people believe in the potential. The image below shows how Condor Energies' balance sheet has changed over time; if you want to see the precise values, simply click on the image.

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Given that situation, many of the best investors like to check if insiders have been buying shares. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.