Should Playa Hotels & Resorts (NASDAQ:PLYA) Be Disappointed With Their 81% Profit?

By
Simply Wall St
Published
July 19, 2021
NasdaqGS:PLYA
Source: Shutterstock

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. To wit, the Playa Hotels & Resorts N.V. (NASDAQ:PLYA) share price is 81% higher than it was a year ago, much better than the market return of around 36% (not including dividends) in the same period. That's a solid performance by our standards! Unfortunately the longer term returns are not so good, with the stock falling 38% in the last three years.

View our latest analysis for Playa Hotels & Resorts

Given that Playa Hotels & Resorts 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. 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.

In the last year Playa Hotels & Resorts saw its revenue shrink by 72%. Despite the lack of revenue growth, the stock has returned a solid 81% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.

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

earnings-and-revenue-growth
NasdaqGS:PLYA Earnings and Revenue Growth July 19th 2021

Take a more thorough look at Playa Hotels & Resorts' financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Playa Hotels & Resorts rewarded shareholders with a total shareholder return of 81% over the last year. What is absolutely clear is that is far preferable to the dismal 11% average annual loss suffered over the last three years. We're generally cautious about putting too much weigh on shorter term data, but the recent improvement is definitely a positive. It's always interesting to track share price performance over the longer term. But to understand Playa Hotels & Resorts better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Playa Hotels & Resorts , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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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.
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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.