Shareholders in Liberty Global (NASDAQ:LBTY.A) are in the red if they invested three years ago
As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Liberty Global Ltd. (NASDAQ:LBTY.A) shareholders have had that experience, with the share price dropping 34% in three years, versus a market return of about 22%. The falls have accelerated recently, with the share price down 11% in the last three months.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Liberty Global
Because Liberty Global 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last three years Liberty Global saw its revenue shrink by 22% per year. That means its revenue trend is very weak compared to other loss making companies. With revenue in decline, the share price decline of 10% per year is hardly undeserved. It would probably be worth asking whether the company can fund itself to profitability. Of course, it is possible for businesses to bounce back from a revenue drop - but we'd want to see that before getting interested.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Liberty Global is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Liberty Global in this interactive graph of future profit estimates.
A Different Perspective
Liberty Global shareholders are down 16% for the year, but the market itself is up 25%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Liberty Global better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Liberty Global (of which 1 is a bit concerning!) 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 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.
