If You Had Bought Arbuthnot Banking Group's (LON:ARBB) Shares Three Years Ago You Would Be Down 25%
Arbuthnot Banking Group PLC (LON:ARBB) shareholders are doubtless heartened to see the share price bounce 32% in just one week. But that doesn't change the fact that the returns over the last three years have been less than pleasing. Truth be told the share price declined 25% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.
Check out our latest analysis for Arbuthnot Banking Group
Because Arbuthnot Banking Group made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 three years, Arbuthnot Banking Group saw its revenue grow by 8.3% per year, compound. That's a pretty good rate of top-line growth. Shareholders have endured a share price decline of 8% per year. So the market has definitely lost some love for the stock. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Arbuthnot Banking Group's balance sheet strength is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Arbuthnot Banking Group's 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. Arbuthnot Banking Group's TSR of was a loss of 19% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
Arbuthnot Banking Group shareholders are up 24% for the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 1.4% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Arbuthnot Banking Group better, we need to consider many other factors. Take risks, for example - Arbuthnot Banking Group has 1 warning sign we think you should be aware of.
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 GB 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.
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