Is Compañía Pesquera Camanchaca's (SNSE:CAMANCHACA) 180% Share Price Increase Well Justified?

By
Simply Wall St
Published
April 19, 2021
SNSE:CAMANCHACA

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. One great example is Compañía Pesquera Camanchaca S.A. (SNSE:CAMANCHACA) which saw its share price drive 180% higher over five years. The last week saw the share price soften some 1.6%.

View our latest analysis for Compañía Pesquera Camanchaca

Compañía Pesquera Camanchaca recorded just US$539,322,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that Compañía Pesquera Camanchaca can make progress and gain better traction for the business, before it runs low on cash.

Companies that lack both meaningful revenue and profits are usually considered high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Some Compañía Pesquera Camanchaca investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.

Our data indicates that Compañía Pesquera Camanchaca had US$265m more in total liabilities than it had cash, when it last reported in December 2020. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 77% per year, over 5 years , but we're happy for holders. Investors must really like its potential. You can click on the image below to see (in greater detail) how Compañía Pesquera Camanchaca's cash levels have changed over time.

debt-equity-history-analysis
SNSE:CAMANCHACA Debt to Equity History April 19th 2021

Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Compañía Pesquera Camanchaca, it has a TSR of 199% for the last 5 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

It's nice to see that Compañía Pesquera Camanchaca shareholders have received a total shareholder return of 48% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 24%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Compañía Pesquera Camanchaca better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Compañía Pesquera Camanchaca (including 1 which makes us a bit uncomfortable) .

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 CL 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


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