Recent 5.2% pullback isn't enough to hurt long-term MakeMyTrip (NASDAQ:MMYT) shareholders, they're still up 71% over 3 years
While MakeMyTrip Limited (NASDAQ:MMYT) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 14% in the last quarter. But over the last three years returns have been decent. After all, the stock has performed better than the market (63%) over that time, over which it gained 71%.
In light of the stock dropping 5.2% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.
Check out our latest analysis for MakeMyTrip
MakeMyTrip wasn't profitable in the last twelve months, 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over the last three years MakeMyTrip has grown its revenue at 2.4% annually. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In that time the share price is up 19% per year, which is not unreasonable given the revenue gorwth. The real question is when the business will generate profits, and how quickly they will grow. In this sort of situation it can be worth putting the stock on your watchlist. If it can become profitable, then even moderate revenue growth could grow profits quickly.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on MakeMyTrip's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
While it's certainly disappointing to see that MakeMyTrip shares lost 6.5% throughout the year, that wasn't as bad as the market loss of 13%. Of far more concern is the 5% p.a. loss served to shareholders over the last five years. This sort of share price action isn't particularly encouraging, but at least the losses are slowing. You could get a better understanding of MakeMyTrip's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.
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