Sotherly Hotels (NASDAQ:SOHO) Share Prices Have Dropped 47% In The Last Three Years

It is a pleasure to report that the Sotherly Hotels Inc. (NASDAQ:SOHO) is up 60% in the last quarter. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 47% in the last three years, significantly under-performing the market.

See our latest analysis for Sotherly Hotels

Given that Sotherly Hotels 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over the last three years, Sotherly Hotels' revenue dropped 3.6% per year. That's not what investors generally want to see. The annual decline of 14% per year in that period has clearly disappointed holders. And with no profits, and weak revenue, are you surprised? However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Sotherly Hotels' total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Sotherly Hotels' TSR, which was a 38% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market gained around 27% in the last year, Sotherly Hotels shareholders lost 46%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% 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. 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. Even so, be aware that Sotherly Hotels is showing 3 warning signs in our investment analysis , you should know about...

But note: Sotherly Hotels 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 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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