Stock Analysis

High Arctic Energy Services' (TSE:HWO) Shareholders Are Down 68% On Their Shares

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TSX:HWO
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High Arctic Energy Services Inc (TSE:HWO) shareholders will doubtless be very grateful to see the share price up 97% in the last quarter. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 68%. So it's good to see it climbing back up. Perhaps the company has turned over a new leaf.

See our latest analysis for High Arctic Energy Services

High Arctic Energy Services 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years High Arctic Energy Services saw its revenue shrink by 13% per year. That is not a good result. The share price decline of 19% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Of course, it's the future that will determine whether today's price is a good one. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
TSX:HWO Earnings and Revenue Growth January 11th 2021

Take a more thorough look at High Arctic Energy Services' financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between High Arctic Energy Services' 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. High Arctic Energy Services' TSR of was a loss of 63% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Investors in High Arctic Energy Services had a tough year, with a total loss of 33%, against a market gain of about 7.5%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand High Arctic Energy Services better, we need to consider many other factors. For example, we've discovered 2 warning signs for High Arctic Energy Services that you should be aware of before investing here.

We will like High Arctic Energy Services 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 CA exchanges.

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