Even though Alcidion Group (ASX:ALC) has lost AU$25m market cap in last 7 days, shareholders are still up 89% over 5 years

The last three months have been tough on Alcidion Group Limited (ASX:ALC) shareholders, who have seen the share price decline a rather worrying 34%. But that doesn't change the fact that the returns over the last five years have been pleasing. After all, the share price is up a market-beating 85% in that time. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 74% drop, in the last year.

Although Alcidion Group has shed AU$25m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

Check out our latest analysis for Alcidion Group

Given that Alcidion Group 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 5 years Alcidion Group saw its revenue grow at 40% per year. That's well above most pre-profit companies. While the compound gain of 13% per year is good, it's not unreasonable given the strong revenue growth. If the strong revenue growth continues, we'd expect the share price to follow, in time. Opportunity lies where the market hasn't fully priced growth in the underlying business.

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

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

What about the Total Shareholder Return (TSR)?

We've already covered Alcidion Group'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. We note that Alcidion Group's TSR, at 89% is higher than its share price return of 85%. 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

While the broader market lost about 0.1% in the twelve months, Alcidion Group shareholders did even worse, losing 74%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Alcidion Group better, we need to consider many other factors. For example, we've discovered 2 warning signs for Alcidion Group that you should be aware of before investing here.

We will like Alcidion Group better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.