While it may not be enough for some shareholders, we think it is good to see the Liberty Latin America Ltd. (NASDAQ:LILA) share price up 20% in a single quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. In fact, the share price is down 32% in the last three years, falling well short of the market return.
Given that Liberty Latin America didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.
In the last three years, Liberty Latin America saw its revenue grow by 1.8% per year, compound. That's not a very high growth rate considering it doesn't make profits. Indeed, the stock dropped 10% 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.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Liberty Latin America stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Liberty Latin America shareholders are up 29% for the year. While you don't go broke making a profit, this return was actually lower than the average market return of about 59%. The silver lining is that the recent rise is far preferable to the annual loss of 10% that shareholders have suffered over the last three years. We hope the turnaround in fortunes continues. It's always interesting to track share price performance over the longer term. But to understand Liberty Latin America better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Liberty Latin America , and understanding them should be part of your investment process.
Liberty Latin America is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. 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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