If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the Par Pacific Holdings, Inc. (NYSE:PARR) share price is up 14% in the last 1 year, clearly besting the market return of around 6.6% (not including dividends). So that should have shareholders smiling. In contrast, the longer term returns are negative, since the share price is 0.9% lower than it was three years ago.
Although Par Pacific Holdings has shed US$85m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
Par Pacific Holdings 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. When a company doesn't make profits, we'd generally expect to see good 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.
Over the last twelve months, Par Pacific Holdings' revenue grew by 8.5%. That's not great considering the company is losing money. The modest growth is probably largely reflected in the share price, which is up 14%. That's not a standout result, but it is solid - much like the level of revenue growth. Given the market doesn't seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
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. This free report showing analyst forecasts should help you form a view on Par Pacific Holdings
A Different Perspective
It's good to see that Par Pacific Holdings has rewarded shareholders with a total shareholder return of 14% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 1.8% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Par Pacific Holdings better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Par Pacific Holdings you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. 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.