Investors bid Engie Energia Chile (SNSE:ECL) up CL$48b despite increasing losses YoY, taking one-year return to 46%

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the Engie Energia Chile S.A. (SNSE:ECL) share price is 46% higher than it was a year ago, much better than the market return of around 20% (not including dividends) in the same period. So that should have shareholders smiling. Unfortunately the longer term returns are not so good, with the stock falling 1.1% in the last three years.

Since the stock has added CL$48b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Engie Energia Chile

Engie Energia Chile 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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Engie Energia Chile grew its revenue by 14% last year. That's not a very high growth rate considering it doesn't make profits. The modest growth is probably largely reflected in the share price, which is up 46%. That's not a standout result, but it is solid - much like the level of revenue growth. It could be worth keeping an eye on this one, especially if growth accelerates.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Engie Energia Chile stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's good to see that Engie Energia Chile has rewarded shareholders with a total shareholder return of 46% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 4% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Engie Energia Chile you should know about.

Of course Engie Energia Chile may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chilean exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.