While it may not be enough for some shareholders, we think it is good to see the Caspian Sunrise plc (LON:CASP) share price up 15% in a single quarter. But over the last three years we've seen a quite serious decline. Indeed, the share price is down a tragic 66% in the last three years. So it is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
Given that Caspian Sunrise 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last three years, Caspian Sunrise saw its revenue grow by 30% per year, compound. That is faster than most pre-profit companies. In contrast, the share price is down 18% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.
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 that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Caspian Sunrise's earnings, revenue and cash flow.
A Different Perspective
While it's never nice to take a loss, Caspian Sunrise shareholders can take comfort that their trailing twelve month loss of 4.7% wasn't as bad as the market loss of around 5.6%. What is more upsetting is the 9% per annum loss investors have suffered over the last half decade. While the losses are slowing we doubt many shareholders are happy with the stock. It's always interesting to track share price performance over the longer term. But to understand Caspian Sunrise better, we need to consider many other factors. Even so, be aware that Caspian Sunrise is showing 4 warning signs in our investment analysis , and 2 of those don't sit too well with us...
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 GB 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.
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