By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, the First Solar, Inc. (NASDAQ:FSLR) share price is up 69% in the last three years, clearly besting than the market return of around 37% (not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 29% in the last year.
While First Solar 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.
First Solar actually saw its revenue drop by 18% per year over three years. The revenue growth might be lacking but the share price has gained 19% each year in that time. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.
First Solar is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
It’s nice to see that First Solar shareholders have received a total shareholder return of 29% over the last year. Notably the five-year annualised TSR loss of 2.9% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.