U.S. markets closed
  • S&P 500

    4,280.15
    +72.88 (+1.73%)
     
  • Dow 30

    33,761.05
    +424.38 (+1.27%)
     
  • Nasdaq

    13,047.19
    +267.27 (+2.09%)
     
  • Russell 2000

    2,016.62
    +41.36 (+2.09%)
     
  • Crude Oil

    91.88
    -2.46 (-2.61%)
     
  • Gold

    1,818.90
    +11.70 (+0.65%)
     
  • Silver

    20.83
    +0.49 (+2.39%)
     
  • EUR/USD

    1.0257
    -0.0068 (-0.66%)
     
  • 10-Yr Bond

    2.8490
    -0.0390 (-1.35%)
     
  • GBP/USD

    1.2139
    -0.0064 (-0.52%)
     
  • USD/JPY

    133.4800
    +0.4810 (+0.36%)
     
  • BTC-USD

    24,535.48
    +26.32 (+0.11%)
     
  • CMC Crypto 200

    574.64
    +3.36 (+0.59%)
     
  • FTSE 100

    7,500.89
    +34.98 (+0.47%)
     
  • Nikkei 225

    28,546.98
    +727.65 (+2.62%)
     

Investing in Kin and Carta (LON:KCT) five years ago would have delivered you a 358% gain

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held Kin and Carta plc (LON:KCT) shares for the last five years, while they gained 332%. If that doesn't get you thinking about long term investing, we don't know what will. The last week saw the share price soften some 6.9%.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

See our latest analysis for Kin and Carta

Because Kin and Carta 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years Kin and Carta saw its revenue shrink by 9.5% per year. So it's pretty surprising to see that the share price is up 34% per year. Obviously, whatever the market is excited about, it's not a track record of revenue growth. At the risk of upsetting holders, this does suggest that hope for a better future is playing a significant role in the share price action.

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

If you are thinking of buying or selling Kin and Carta stock, you should check out this FREE detailed report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Kin and Carta'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. Its history of dividend payouts mean that Kin and Carta's TSR of 358% over the last 5 years is better than the share price return.

A Different Perspective

It's nice to see that Kin and Carta shareholders have received a total shareholder return of 14% over the last year. However, that falls short of the 36% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. 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 Kin and Carta is showing 1 warning sign in our investment analysis , you should know about...

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.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.