Investors three-year losses continue as Atlantica Sustainable Infrastructure (NASDAQ:AY) dips a further 6.4% this week, earnings continue to decline
In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term Atlantica Sustainable Infrastructure plc (NASDAQ:AY) shareholders, since the share price is down 44% in the last three years, falling well short of the market return of around 20%. And more recent buyers are having a tough time too, with a drop of 35% in the last year. Shareholders have had an even rougher run lately, with the share price down 31% in the last 90 days.
After losing 6.4% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
View our latest analysis for Atlantica Sustainable Infrastructure
While Atlantica Sustainable Infrastructure made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over three years, Atlantica Sustainable Infrastructure grew revenue at 3.5% per year. That's not a very high growth rate considering it doesn't make profits. Indeed, the stock dropped 13% over the last three years. Shareholders will probably be hoping growth picks up soon. But the real upside for shareholders will be if the company can start generating profits.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Atlantica Sustainable Infrastructure is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Atlantica Sustainable Infrastructure will earn in the future (free analyst consensus estimates)
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Atlantica Sustainable Infrastructure, it has a TSR of -34% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
While the broader market gained around 12% in the last year, Atlantica Sustainable Infrastructure shareholders lost 30% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 3%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Atlantica Sustainable Infrastructure is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
But note: Atlantica Sustainable Infrastructure 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 American exchanges.
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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.
