Bluelake Mineral (NGM:BLUE) delivers shareholders decent 13% CAGR over 5 years, surging 45% in the last week alone

Bluelake Mineral AB (publ) (NGM:BLUE) shareholders are doubtless heartened to see the share price bounce 45% in just one week. But over the last half decade, the stock has not performed well. In fact, the share price is down 72%, which falls well short of the return you could get by buying an index fund.

On a more encouraging note the company has added kr33m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.

See our latest analysis for Bluelake Mineral

Bluelake Mineral didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, investors may be hoping that Bluelake Mineral finds some valuable resources, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Bluelake Mineral has already given some investors a taste of the bitter losses that high risk investing can cause.

Bluelake Mineral had liabilities exceeding cash by kr13m when it last reported in March 2024, according to our data. That makes it extremely high risk, in our view. But with the share price diving 11% per year, over 5 years , it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Bluelake Mineral's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

Of course, the truth is that it is hard to value companies without much revenue or profit. What if insiders are ditching the stock hand over fist? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Bluelake Mineral's total shareholder return (TSR) and its share price return. 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. Bluelake Mineral hasn't been paying dividends, but its TSR of 85% exceeds its share price return of -72%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

Bluelake Mineral shareholders are up 11% for the year. Unfortunately this falls short of the market return. On the bright side, the longer term returns (running at about 13% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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. For example, we've discovered 5 warning signs for Bluelake Mineral (3 make us uncomfortable!) that you should be aware of before investing here.

But note: Bluelake Mineral 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 Swedish exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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