The Eagle Plains Resources Ltd. (CVE:EPL) share price has had a bad week, falling 13%. Looking further back, the stock has generated good profits over five years. It has returned a market beating 67% in that time. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 33% decline over the last three years: that's a long time to wait for profits.
Given that Eagle Plains Resources 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.
In the last 5 years Eagle Plains Resources saw its revenue grow at 5.2% per year. Put simply, that growth rate fails to impress. The modest growth is probably broadly reflected in the share price, which is up 11%, per year over 5 years. We'd be looking for the underlying business to grow revenue a bit faster.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized 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. This free interactive report on Eagle Plains Resources's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Eagle Plains Resources shareholders are down 9.1% for the year, but the market itself is up 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. If you would like to research Eagle Plains Resources in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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 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.
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