Mitchells & Butlers (LON:MAB) pulls back 4.9% this week, but still delivers shareholders decent 53% return over 1 year
If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Mitchells & Butlers plc (LON:MAB) share price is 53% higher than it was a year ago, much better than the market decline of around 5.3% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 31% in the last three years.
Since the long term performance has been good but there's been a recent pullback of 4.9%, let's check if the fundamentals match the share price.
See our latest analysis for Mitchells & Butlers
Because Mitchells & Butlers 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year Mitchells & Butlers saw its revenue grow by 13%. That's not a very high growth rate considering it doesn't make profits. In keeping with the revenue growth, the share price gained 53% in that time. That's not a standout result, but it is solid - much like the level of revenue growth. Given the market doesn't seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Mitchells & Butlers is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Mitchells & Butlers in this interactive graph of future profit estimates.
A Different Perspective
It's good to see that Mitchells & Butlers has rewarded shareholders with a total shareholder return of 53% in the last twelve months. Notably the five-year annualised TSR loss of 0.7% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Mitchells & Butlers you should know about.
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 British 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.
