Introducing Altice Europe, The Stock That Tanked 86%

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While it may not be enough for some shareholders, we think it is good to see the Altice Europe N.V. (AMS:ATC) share price up 16% in a single quarter. But that doesn’t change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 86% in the last three years, falling well short of the market return.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.

View our latest analysis for Altice Europe

Because Altice Europe 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.

In the last three years, Altice Europe saw its revenue grow by 18% per year, compound. That’s a fairly respectable growth rate. So it seems unlikely the 48% share price drop (each year) is entirely about the revenue. More likely, the market was spooked by the cost of that revenue. If you buy into companies that lose money then you always risk losing money yourself. Just don’t lose the lesson.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

ENXTAM:ATC Income Statement, February 22nd 2019
ENXTAM:ATC Income Statement, February 22nd 2019

Altice Europe is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Altice Europe will earn in the future (free analyst consensus estimates)

What about the Total Shareholder Return (TSR)?

We’d be remiss not to mention the difference between Altice Europe’s total shareholder return (TSR) and its share price return. 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. Altice Europe hasn’t been paying dividends, but its TSR of 18% exceeds its share price return of -86%, implying it has raised capital at a discount.

A Different Perspective

Pleasingly, Altice Europe’s total shareholder return last year was 102%. That’s better than the annualized TSR of 5.7% over the last three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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