Stock Analysis

If You Had Bought Ferroglobe (NASDAQ:GSM) Shares A Year Ago You'd Have Earned 96% Returns

  •  Updated
NasdaqCM:GSM
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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the Ferroglobe PLC (NASDAQ:GSM) share price is 96% higher than it was a year ago, much better than the market return of around 20% (not including dividends) in the same period. That's a solid performance by our standards! In contrast, the longer term returns are negative, since the share price is 92% lower than it was three years ago.

See our latest analysis for Ferroglobe

Ferroglobe isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Ferroglobe actually shrunk its revenue over the last year, with a reduction of 34%. The stock is up 96% in that time, a fine performance given the revenue drop. 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.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NasdaqCM:GSM Earnings and Revenue Growth November 27th 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We're pleased to report that Ferroglobe rewarded shareholders with a total shareholder return of 96% over the last year. What is absolutely clear is that is far preferable to the dismal 24% 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 Ferroglobe better, we need to consider many other factors. For instance, we've identified 2 warning signs for Ferroglobe (1 is potentially serious) that you should be aware of.

We will like Ferroglobe better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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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