PointsBet Holdings (ASX:PBH) Has Gifted Shareholders With A Fantastic 236% Total Return On Their Investment

By
Simply Wall St
Published
February 22, 2021
ASX:PBH

Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example PointsBet Holdings Limited (ASX:PBH). Its share price is already up an impressive 212% in the last twelve months. It's also good to see the share price up 39% over the last quarter. We'll need to follow PointsBet Holdings for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

View our latest analysis for PointsBet Holdings

PointsBet Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last twelve months, PointsBet Holdings' revenue grew by 193%. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 212% in response. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
ASX:PBH Earnings and Revenue Growth February 22nd 2021

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on PointsBet Holdings

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between PointsBet Holdings' total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. We note that PointsBet Holdings' TSR, at 236% is higher than its share price return of 212%. 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 nice to see that PointsBet Holdings shareholders have gained 236% over the last year. The more recent returns haven't been as impressive as the longer term returns, coming in at just 39%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). 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. To that end, you should learn about the 4 warning signs we've spotted with PointsBet Holdings (including 1 which makes us a bit uncomfortable) .

PointsBet Holdings 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


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