Argo Blockchain (LON:ARB) shareholders have earned a 39% CAGR over the last five years
Argo Blockchain plc (LON:ARB) shareholders might be rather concerned because the share price has dropped 44% in the last month. But that doesn't change the fact that the returns over the last half decade have been spectacular. To be precise, the stock price is 418% higher than it was five years ago, a wonderful performance by any measure. Arguably, the recent fall is to be expected after such a strong rise. The most important thing for savvy investors to consider is whether the underlying business can justify the share price gain. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 83% decline over the last three years: that's a long time to wait for profits.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Argo Blockchain
Argo Blockchain 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
For the last half decade, Argo Blockchain can boast revenue growth at a rate of 36% per year. Even measured against other revenue-focussed companies, that's a good result. Fortunately, the market has not missed this, and has pushed the share price up by 39% per year in that time. Despite the strong run, top performers like Argo Blockchain have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
It's nice to see that Argo Blockchain shareholders have received a total shareholder return of 12% over the last year. Having said that, the five-year TSR of 39% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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 Argo Blockchain is showing 4 warning signs in our investment analysis , and 2 of those are concerning...
We will like Argo Blockchain 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 British 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.
