Should Santos Brasil Participações (BVMF:STBP3) Be Disappointed With Their 52% Profit?

Santos Brasil Participações S.A. (BVMF:STBP3) shareholders might be concerned after seeing the share price drop 13% in the last month. In contrast the stock has done reasonably well over three years. It beat the market return of 45% in that time, gaining 52%.

View our latest analysis for Santos Brasil Participações

Santos Brasil Participações wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.

Santos Brasil Participações' revenue trended up 5.0% each year over three years. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In that time the share price is up 15% per year, which is not unreasonable given the revenue gorwth. The real question is when the business will generate profits, and how quickly they will grow. In this sort of situation it can be worth putting the stock on your watchlist. If it can become profitable, then even moderate revenue growth could grow profits quickly.

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 Santos Brasil Participações stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Over the last year, Santos Brasil Participações shareholders took a loss of 1.0%, including dividends. In contrast the market gained about 19%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Fortunately the longer term story is brighter, with total returns averaging about 15% per year over three years. The recent sell-off could be an opportunity if the business remains sound, 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 Santos Brasil Participações better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Santos Brasil Participações .

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. 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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