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Ensign Energy Services' (TSE:ESI) Stock Price Has Reduced 83% In The Past Three Years

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Simply Wall St
·4 min read
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It is a pleasure to report that the Ensign Energy Services Inc. (TSE:ESI) is up 133% in the last quarter. But that is meagre solace in the face of the shocking decline over three years. The share price has sunk like a leaky ship, down 83% in that time. Arguably, the recent bounce is to be expected after such a bad drop. Only time will tell if the company can sustain the turnaround.

While a drop like that is definitely a body blow, money isn't as important as health and happiness.

View our latest analysis for Ensign Energy Services

Given that Ensign Energy Services 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. Shareholders of unprofitable companies usually expect strong 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.

Over three years, Ensign Energy Services grew revenue at 13% per year. That's a pretty good rate of top-line growth. So it's hard to believe the share price decline of 22% per year is due to the revenue. It could be that the losses were much larger than expected. This is exactly why investors need to diversify - even when a loss making company grows revenue, it can fail to deliver for shareholders.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Ensign Energy Services

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Ensign Energy Services' total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Ensign Energy Services' TSR, which was a 75% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

Ensign Energy Services shareholders are down 39% for the year, but the market itself is up 5.3%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 11% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 Ensign Energy Services is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

Ensign Energy Services is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.