Virgin Money UK's(LON:VMUK) Share Price Is Down 69% Over The Past Three Years.

By
Simply Wall St
Published
August 05, 2020
LSE:VMUK

While not a mind-blowing move, it is good to see that the Virgin Money UK PLC (LON:VMUK) share price has gained 22% in the last three months. But that doesn't change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 69% in that period. So it is really good to see an improvement. After all, could be that the fall was overdone.

See our latest analysis for Virgin Money UK

Virgin Money UK 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. 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.

In the last three years, Virgin Money UK saw its revenue grow by 14% per year, compound. That's a pretty good rate of top-line growth. That contrasts with the weak share price, which has fallen 19% compounded, over three years. The market must have had really high expectations to be disappointed with this progress. So this is one stock that might be worth investigating further, or even adding to your watchlist.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
LSE:VMUK Earnings and Revenue Growth August 5th 2020

Virgin Money UK is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Virgin Money UK shareholders are down 39% for the year, falling short of the market return. The market shed around 8.4%, no doubt weighing on the stock price. Shareholders have lost 19% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. For instance, we've identified 1 warning sign for Virgin Money UK that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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