Stock Analysis

Grupo Média Capital SGPS (ELI:MCP shareholders incur further losses as stock declines 13% this week, taking five-year losses to 62%

Source: Shutterstock

Generally speaking long term investing is the way to go. But along the way some stocks are going to perform badly. For example, after five long years the Grupo Média Capital, SGPS, S.A. (ELI:MCP) share price is a whole 68% lower. That is extremely sub-optimal, to say the least. On top of that, the share price is down 13% in the last week.

If the past week is anything to go by, investor sentiment for Grupo Média Capital SGPS isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Grupo Média Capital SGPS

Grupo Média Capital SGPS 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last five years Grupo Média Capital SGPS saw its revenue shrink by 6.0% per year. That's not what investors generally want to see. With neither profit nor revenue growth, the loss of 11% per year doesn't really surprise us. We don't think anyone is rushing to buy this stock. Not that many investors like to invest in companies that are losing money and not growing revenue.

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

ENXTLS:MCP Earnings and Revenue Growth March 14th 2023

If you are thinking of buying or selling Grupo Média Capital SGPS stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Grupo Média Capital SGPS' TSR for the last 5 years was -62%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Investors in Grupo Média Capital SGPS had a tough year, with a total loss of 15% (including dividends), against a market gain of about 6.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 10% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Grupo Média Capital SGPS (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

Valuation is complex, but we're helping make it simple.

Find out whether Grupo Média Capital SGPS is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis


Grupo Média Capital SGPS

Grupo Media Capital, SGPS, S.A. engages in the production and broadcasting of television and radio programs, and production and operation of cinematographic and video graphic activities in Portugal and internationally.

Excellent balance sheet second-rate dividend payer.