NH Hotel Group, S.A. (BME:NHH) shareholders will doubtless be very grateful to see the share price up 43% in the last quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 43% in the last three years, significantly under-performing the market.
View our latest analysis for NH Hotel Group
Given that NH Hotel Group didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years, NH Hotel Group's revenue dropped 6.4% per year. That's not what investors generally want to see. The stock has disappointed holders over the last three years, falling 13%, annualized. That makes sense given the lack of either profits or revenue growth. Of course, sentiment could become too negative, and the company may actually be making progress to profitability.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on NH Hotel Group'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 NH Hotel Group'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 NH Hotel Group shareholders, and that cash payout explains why its total shareholder loss of 41%, over the last 3 years, isn't as bad as the share price return.
A Different Perspective
While the broader market lost about 6.6% in the twelve months, NH Hotel Group shareholders did even worse, losing 34%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.7% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for NH Hotel Group (of which 1 is a bit unpleasant!) you should know about.
Of course NH Hotel Group 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 ES 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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About BME:NHH
Minor Hotels Europe & Americas
Operates hotels in Spain, Italy, Benelux, Germany, Latin America, and internationally.
Slightly overvalued with questionable track record.
