If You Had Bought SpiceJet (NSE:SPICEJET) Shares A Year Ago You'd Have Earned 13% Returns

On average, over time, stock markets tend to rise higher. This makes investing attractive. But if you choose that path, you're going to buy some stocks that fall short of the market. Unfortunately for shareholders, while the SpiceJet Limited (NSE:SPICEJET) share price is up 13% in the last year, that falls short of the market return. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.

View our latest analysis for SpiceJet

SpiceJet 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. Shareholders of unprofitable companies usually expect strong 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.

SpiceJet actually shrunk its revenue over the last year, with a reduction of 49%. Given the revenue reduction the modest 13% share price rise over the year seems pretty decent. We'd want to see progress to profitability before getting too interested in this stock.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're happy to report that SpiceJet are up 13% over the year. Unfortunately this falls short of the market return of around 38%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 7.9% in the last three months. But a weak quarter certainly doesn't diminish the longer-term achievements of the 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 2 warning signs we've spotted with SpiceJet (including 1 which makes us a bit uncomfortable) .

But note: SpiceJet may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

If you decide to trade SpiceJet, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.