The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. Long term Next Fifteen Communications Group plc (LON:NFC) shareholders would be well aware of this, since the stock is up 124% in five years. On top of that, the share price is up 24% in about a quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Next Fifteen Communications Group's earnings per share are down 3.3% per year, despite strong share price performance over five years. This was, in part, due to extraordinary items impacting earning in the last twelve months.
By glancing at these numbers, we'd posit that the decline in earnings per share is not representative of how the business has changed over the years. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
On the other hand, Next Fifteen Communications Group's revenue is growing nicely, at a compound rate of 19% over the last five years. It's quite possible that management are prioritizing revenue growth over EPS growth at the moment.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
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 the Total Shareholder Return (TSR)?
We've already covered Next Fifteen Communications Group's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Next Fifteen Communications Group's TSR of 139% for the 5 years exceeded its share price return, because it has paid dividends.
A Different Perspective
While it's never nice to take a loss, Next Fifteen Communications Group shareholders can take comfort that their trailing twelve month loss of 0.6% wasn't as bad as the market loss of around 10%. Longer term investors wouldn't be so upset, since they would have made 19%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand Next Fifteen Communications Group better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Next Fifteen Communications Group .
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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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