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Does Decisive Dividend's (CVE:DE) Share Price Gain of 16% Match Its Business Performance?

Simply Wall St

One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Decisive Dividend Corporation (CVE:DE), which is up 16%, over three years, soundly beating the market return of 4.6% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 4.8% , including dividends .

Check out our latest analysis for Decisive Dividend

We don't think that Decisive Dividend's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last 3 years Decisive Dividend saw its revenue grow at 38% per year. That's much better than most loss-making companies. While the compound gain of 5.1% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put Decisive Dividend on your radar. If the company is trending towards profitability then it could be very interesting.

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

TSXV:DE Income Statement, January 5th 2020

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Decisive Dividend the TSR over the last 3 years was 51%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Over the last year Decisive Dividend shareholders have received a TSR of 4.8%. While you don't go broke making a profit, this return was actually lower than the average market return of about 17%. But the (superior) three-year TSR of 15% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

We will like Decisive Dividend 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 CA exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.