The last three months have been tough on Intelsat S.A. (NYSE:I) shareholders, who have seen the share price decline a rather worrying 71%. But that doesn’t undermine the rather lovely longer-term return, if you measure over the last three years. The share price marched upwards over that time, and is now 137% higher than it was. To some, the recent share price pullback wouldn’t be surprising after such a good run. Only time will tell if there is still too much optimism currently reflected in the share price.
Intelsat isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn’t make profits, we’d generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 3 years Intelsat saw its revenue shrink by 1.2% per year. So the share price gain of 33% per year is quite surprising. It’s a good reminder that expectations about the future, not the past history, always impact share prices.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Intelsat is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Intelsat stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Intelsat shareholders are down 65% for the year, but the market itself is up 37%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 17% over the last half decade. We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality businesses. 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 example, we’ve discovered 3 warning signs for Intelsat which any shareholder or potential investor should be aware of.
For those who like to find winning investments 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 US exchanges.
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.
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