The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Mackmyra Svensk Whisky AB (publ) (STO:MACK B) share price is down 36% in the last year. That falls noticeably short of the market return of around 34%. However, the longer term returns haven’t been so bad, with the stock down 13% in the last three years. It’s down 2.2% in the last seven days.
Mackmyra Svensk Whisky 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.
Mackmyra Svensk Whisky grew its revenue by 5.7% over the last year. That’s not a very high growth rate considering it doesn’t make profits. Given this fairly low revenue growth (and lack of profits), it’s not particularly surprising to see the stock down 36% in a year. In a hot market it’s easy to forget growth is the life-blood of a loss making company. But if you buy a loss making company then you could become a loss making investor.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. It might be well worthwhile taking a look at our free report on Mackmyra Svensk Whisky’s earnings, revenue and cash flow.
What about the Total Shareholder Return (TSR)?
We’ve already covered Mackmyra Svensk Whisky’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. Dividends have been really beneficial for Mackmyra Svensk Whisky shareholders, and that cash payout explains why its total shareholder loss of 30%, over the last year, isn’t as bad as the share price return.
A Different Perspective
Mackmyra Svensk Whisky shareholders are down 30% for the year, but the market itself is up 34%. 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 1.8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For example, we’ve discovered 4 warning signs for Mackmyra Svensk Whisky (of which 1 is major) which any shareholder or potential investor should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do 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 SE exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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