ROSSETI South (MCX:MRKY) Has Compensated Shareholders With A Respectable 89% Return On Their Investment

The main point of investing for the long term is to make money. Better yet, you'd like to see the share price move up more than the market average. But Public Joint Stock Company "ROSSETI South" (MCX:MRKY) has fallen short of that second goal, with a share price rise of 46% over five years, which is below the market return. The last year has been disappointing, with the stock price down 20% in that time.

View our latest analysis for ROSSETI South

Given that ROSSETI South didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

For the last half decade, ROSSETI South can boast revenue growth at a rate of 5.7% per year. Put simply, that growth rate fails to impress. Like its revenue, its share price gained over the period. The increase of 8% per year probably reflects the modest revenue growth. If profitability is likely in the near term, then this might be one to add to your watchlist.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on ROSSETI South's balance sheet strength is a great place to start, if you want to investigate the stock further.

What about the Total Shareholder Return (TSR)?

We've already covered ROSSETI South's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. ROSSETI South's TSR of 89% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

While the broader market gained around 3.2% in the last year, ROSSETI South shareholders lost 20%. 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. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Take risks, for example - ROSSETI South has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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 RU exchanges.

If you’re looking to trade ROSSETI South, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide 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.