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Imagine Owning Cellnet Group (ASX:CLT) And Wondering If The 43% Share Price Slide Is Justified

Simply Wall St

Cellnet Group Limited (ASX:CLT) shareholders should be happy to see the share price up 17% in the last week. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 43% in the last three years, falling well short of the market return.

View our latest analysis for Cellnet Group

Given that Cellnet Group only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over three years, Cellnet Group grew revenue at 13% per year. That's a pretty good rate of top-line growth. Shareholders have endured a share price decline of 17% per year. So the market has definitely lost some love for the stock. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

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

ASX:CLT Income Statement April 7th 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Cellnet Group's total shareholder return (TSR) and its share price change, which we've covered above. 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. Its history of dividend payouts mean that Cellnet Group's TSR, which was a 38% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market lost about 12% in the twelve months, Cellnet Group shareholders did even worse, losing 41%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4.2% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 Cellnet Group is showing 6 warning signs in our investment analysis , and 3 of those shouldn't be ignored...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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.