It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. For instance the TMM Real Estate Development Plc (FRA:TR61) share price is 250% higher than it was three years ago. How nice for those who held the stock! Also pleasing for shareholders was the 67% gain in the last three months.
Given that TMM Real Estate Development 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. 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.
TMM Real Estate Development's revenue trended up 18% each year over three years. That's pretty nice growth. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 52% per year over three years. It's hard to value pre-profit businesses, but it seems like the market has become a lot more optimistic about this one! Some investors like to buy in just after a company becomes profitable, since that can be a powerful inflexion point.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
Take a more thorough look at TMM Real Estate Development's financial health with this free report on its balance sheet.
A Different Perspective
It's good to see that TMM Real Estate Development has rewarded shareholders with a total shareholder return of 75% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 31% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. You could get a better understanding of TMM Real Estate Development's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
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 DE exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.