As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Geo Energy Resources Limited (SGX:RE4) shareholders have had that experience, with the share price dropping 45% in three years, versus a market return of about 20%. And the ride hasn’t got any smoother in recent times over the last year, with the price 34% lower in that time. There was little comfort for shareholders in the last week as the price declined a further 2.9%.
Given that Geo Energy Resources didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last three years, Geo Energy Resources saw its revenue grow by 11% per year, compound. That’s a pretty good rate of top-line growth. Shareholders have endured a share price decline of 18% per year. So the market has definitely lost some love for the stock. However, that’s in the past now, and it’s the future is more important – and the future looks brighter (based on revenue, anyway).
You can see below how revenue has changed over time.
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. So we recommend checking out this free report showing consensus forecasts
What about the Total Shareholder Return (TSR)?
We’ve already covered Geo Energy Resources’s share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Geo Energy Resources’s TSR, which was a 37% drop over the last 3 years, was not as bad as the share price return.
A Different Perspective
While the broader market gained around 9.5% in the last year, Geo Energy Resources shareholders lost 33%. 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 6.4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Geo Energy Resources is not the only stock that insiders are buying. 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 SG 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.