Shareholders of Compañía Pesquera Camanchaca (SNSE:CAMANCHACA) Must Be Delighted With Their 402% Total Return

For many, the main point of investing in the stock market is to achieve spectacular returns. And we've seen some truly amazing gains over the years. Just think about the savvy investors who held Compañía Pesquera Camanchaca S.A. (SNSE:CAMANCHACA) shares for the last five years, while they gained 370%. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 22% over the last quarter. But this move may well have been assisted by the reasonably buoyant market (up 17% in 90 days).

Check out our latest analysis for Compañía Pesquera Camanchaca

With just US$616,006,000 worth of revenue in twelve months, we don't think the market considers Compañía Pesquera Camanchaca to have proven its business plan. 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 almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. 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). Compañía Pesquera Camanchaca has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Our data indicates that Compañía Pesquera Camanchaca had US$236m more in total liabilities than it had cash, when it last reported in September 2020. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 52% per year, over 5 years , but we're happy for holders. Investors must really like its potential. You can see in the image below, how Compañía Pesquera Camanchaca's cash levels have changed over time (click to see the values).

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. 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. As it happens, Compañía Pesquera Camanchaca's TSR for the last 5 years was 402%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's good to see that Compañía Pesquera Camanchaca has rewarded shareholders with a total shareholder return of 2.0% in the last twelve months. And that does include the dividend. Having said that, the five-year TSR of 38% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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. Even so, be aware that Compañía Pesquera Camanchaca is showing 1 warning sign in our investment analysis , you should know about...

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 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.
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