Imagine Owning Punjab & Sind Bank (NSE:PSB) And Wondering If The 26% Share Price Slide Is Justified
Punjab & Sind Bank (NSE:PSB) shareholders should be happy to see the share price up 16% in the last month. But if you look at the last five years the returns have not been good. In fact, the share price is down 26%, which falls well short of the return you could get by buying an index fund.
See our latest analysis for Punjab & Sind Bank
Because Punjab & Sind Bank is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
Over half a decade Punjab & Sind Bank reduced its trailing twelve month revenue by 11% for each year. That's definitely a weaker result than most pre-profit companies report. It seems pretty reasonable to us that the share price dipped 5.9% per year in that time. This loss means the stock shareholders are probably pretty annoyed. Risk averse investors probably wouldn't like this one much.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
This free interactive report on Punjab & Sind Bank's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Dividend Lost
The share price return figures discussed above don't include the value of dividends paid previously, but the total shareholder return (TSR) does. Many would argue the TSR gives a more complete picture of the value a stock brings to its holders. Punjab & Sind Bank's TSR over the last 5 years is -22%; better than its share price return. Even though the company isn't paying dividends at the moment, it has done in the past.
A Different Perspective
Punjab & Sind Bank shareholders are down 11% for the year, but the market itself is up 0.4%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4.9% over the last half decade. We realise that Buffett 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 businesses. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course Punjab & Sind Bank may not be the best stock to buy. So you may wish to see this freecollection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.