Salini Impregilo S.p.A. (BIT:SAL) shareholders should be happy to see the share price up 16% in the last quarter. But don’t envy holders — looking back over 5 years the returns have been really bad. The share price has failed to impress anyone , down a sizable 55% during that time. Some might say the recent bounce is to be expected after such a bad drop. We’d err towards caution given the long term under-performance.
Salini Impregilo isn’t a profitable company, so it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over five years, Salini Impregilo grew its revenue at 16% per year. That’s well above most other pre-profit companies. In contrast, the share price is has averaged a loss of 15% per year – that’s quite disappointing. It’s safe to say investor expectations are more grounded now. If you think the company can keep up its revenue growth, you’d have to consider the possibility that there’s an opportunity here.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Salini Impregilo the TSR over the last 5 years was -52%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
We regret to report that Salini Impregilo shareholders are down 11% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 1.1%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, longer term shareholders are suffering worse, given the loss of 14% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. Before spending more time on Salini Impregilo it might be wise to click here to see if insiders have been buying or selling shares.
But note: Salini Impregilo may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IT exchanges.
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.
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. Thank you for reading.