Reflecting on Armour Energy's (ASX:AJQ) Share Price Returns Over The Last Five Years

Armour Energy Limited (ASX:AJQ) shareholders will doubtless be very grateful to see the share price up 190% in the last quarter. But that is little comfort to those holding over the last half decade, sitting on a big loss. Indeed, the share price is down 53% in the period. So we're hesitant to put much weight behind the short term increase. But it could be that the fall was overdone.

See our latest analysis for Armour Energy

Armour Energy isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, Armour Energy grew its revenue at 60% per year. That's better than most loss-making companies. Unfortunately for shareholders the share price has dropped 9% per year - disappointing considering the growth. It's safe to say investor expectations are more grounded now. If you think the company can keep up its revenue growth, you'd have to consider the possibility that there's an opportunity here.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Armour Energy stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Armour Energy shareholders have received a total shareholder return of 7.0% over the last year. That certainly beats the loss of about 9% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Even so, be aware that Armour Energy is showing 3 warning signs in our investment analysis , and 1 of those shouldn't be ignored...

But note: Armour Energy may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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