Would Shareholders Who Purchased HWA's (ETR:H9W) Stock Five Years Be Happy With The Share price Today?

By
Simply Wall St
Published
May 29, 2021
XTRA:H9W
Source: Shutterstock

Ideally, your overall portfolio should beat the market average. But in any portfolio, there will be mixed results between individual stocks. At this point some shareholders may be questioning their investment in HWA AG (ETR:H9W), since the last five years saw the share price fall 39%. And we doubt long term believers are the only worried holders, since the stock price has declined 33% over the last twelve months.

Check out our latest analysis for HWA

Because HWA made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over half a decade HWA reduced its trailing twelve month revenue by 0.9% for each year. While far from catastrophic that is not good. The stock hasn't done well for shareholders in the last five years, falling 7%, annualized. But it doesn't surprise given the falling revenue. Without profits, its hard to see how shareholders win if the revenue keeps falling.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
XTRA:H9W Earnings and Revenue Growth May 30th 2021

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

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between HWA's 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. HWA's TSR of was a loss of 34% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Investors in HWA had a tough year, with a total loss of 33%, against a market gain of about 36%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 6% per year over five years. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with HWA (including 1 which doesn't sit too well with us) .

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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