Stock Analysis

Would Shareholders Who Purchased Crown Point Energy's (CVE:CWV) Stock Year Be Happy With The Share price Today?

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TSXV:CWV
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The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But it would be foolish to simply accept every extremely large loss as an inevitable part of the game. So spare a thought for the long term shareholders of Crown Point Energy Inc. (CVE:CWV); the share price is down a whopping 81% in the last twelve months. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. We note that it has not been easy for shareholders over three years, either; the share price is down 73% in that time. The falls have accelerated recently, with the share price down 23% in the last three months.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

Check out our latest analysis for Crown Point Energy

Crown Point 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Crown Point Energy's revenue didn't grow at all in the last year. In fact, it fell 66%. That looks like a train-wreck result to investors far and wide. The market didn't mess around, sending shares down the garbage shute. (Or down 81% to be specific). This kind of performance makes us wary, and usually gives us reason to forget about a stock. A healthy aversion to bagholding (holding potentially worthless stocks) sees many shareholders avoid buying shares like this, rightly or wrongly.

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

earnings-and-revenue-growth
TSXV:CWV Earnings and Revenue Growth November 25th 2020

This free interactive report on Crown Point Energy's balance sheet strength is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We've already covered Crown Point Energy's 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. Dividends have been really beneficial for Crown Point Energy shareholders, and that cash payout explains why its total shareholder loss of 71%, over the last year, isn't as bad as the share price return.

A Different Perspective

Crown Point Energy shareholders are down 71% for the year, but the market itself is up 3.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should be aware of the 2 warning signs we've spotted with Crown Point Energy .

We will like Crown Point Energy 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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