These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the OncoSil Medical Limited (ASX:OSL) share price is 64% higher than it was a year ago, much better than the market decline of around 5.2% (not including dividends) in the same period. So that should have shareholders smiling. However, the stock hasn’t done so well in the longer term, with the stock only up 21% in three years.
Given that OncoSil Medical 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. When a company doesn’t make profits, we’d generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year OncoSil Medical saw its revenue shrink by 18%. The stock is up 64% in that time, a fine performance given the revenue drop. To us that means that there isn’t a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. This free report showing analyst forecasts should help you form a view on OncoSil Medical
What about the Total Shareholder Return (TSR)?
We’d be remiss not to mention the difference between OncoSil Medical’s total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. We note that OncoSil Medical’s TSR, at 67% is higher than its share price return of 64%. When you consider it hasn’t been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It’s good to see that OncoSil Medical has rewarded shareholders with a total shareholder return of 67% in the last twelve months. That gain is better than the annual TSR over five years, which is 3.2%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We’ve identified 5 warning signs with OncoSil Medical (at least 1 which can’t be ignored) , and understanding them should be part of your investment process.
OncoSil Medical is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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