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Those Who Purchased Patagonia Gold (LON:PGD) Shares Five Years Ago Have A 96% Loss To Show For It

Simply Wall St

Patagonia Gold plc (LON:PGD) shareholders should be happy to see the share price up 12% in the last month. But will that repair the damage for the weary investors who have owned this stock as it declined over half a decade? Probably not. In fact, the share price has tumbled down a mountain to land 96% lower after that period. While the recent increase might be a green shoot, we're certainly hesitant to rejoice. The million dollar question is whether the company can justify a long term recovery.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.

View our latest analysis for Patagonia Gold

Because Patagonia Gold is loss-making, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over five years, Patagonia Gold grew its revenue at 13% per year. That's a fairly respectable growth rate. So it is unexpected to see the stock down 46% per year in the last five years. The market can be a harsh master when your company is losing money and revenue growth disappoints.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

AIM:PGD Income Statement, April 23rd 2019

If you are thinking of buying or selling Patagonia Gold stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Patagonia Gold shareholders are down 74% for the year, but the market itself is up 5.2%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 46% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. You could get a better understanding of Patagonia Gold's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.