These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Damartex (EPA:ALDAR) share price is up 78% in the last year, clearly besting the market return of around 34% (not including dividends). That's a solid performance by our standards! Zooming out, the stock is actually down 26% in the last three years.
Given that Damartex 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Damartex actually shrunk its revenue over the last year, with a reduction of 2.6%. The stock is up 78% in that time, a fine performance given the revenue drop. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What about the Total Shareholder Return (TSR)?
We've already covered Damartex's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Damartex's TSR of 93% for the year exceeded its share price return, because it has paid dividends.
A Different Perspective
It's good to see that Damartex has rewarded shareholders with a total shareholder return of 93% in the last twelve months. That gain is better than the annual TSR over five years, which is 1.5%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Damartex better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Damartex you should know about.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FR exchanges.
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