It hasn't been the best quarter for Metalfrio Solutions S.A. (BVMF:FRIO3) shareholders, since the share price has fallen 14% in that time. On the bright side the share price is up over the last half decade. In that time, it is up 53%, which isn't bad, but is below the market return of 123%. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 26% drop, in the last year.
Since the stock has added R$28m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Given that Metalfrio Solutions 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last 5 years Metalfrio Solutions saw its revenue grow at 12% per year. That's a fairly respectable growth rate. While the share price has gained 9% per year for five years, that's hardly amazing considering the market also rose. You could even argue that the share price was over optimistic, previously.
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 Metalfrio Solutions stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We've already covered Metalfrio Solutions' share price action, but we should also mention its total shareholder return (TSR). 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. Metalfrio Solutions' TSR of 147% for the 5 years exceeded its share price return, because it has paid dividends.
A Different Perspective
Metalfrio Solutions shareholders are down 26% for the year, but the market itself is up 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 20% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. For instance, we've identified 3 warning signs for Metalfrio Solutions (2 don't sit too well with us) that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BR 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.
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