This month, we saw the Tesserent Limited (ASX:TNT) up an impressive 39%. 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 27% in the last three years, falling well short of the market return.
Tesserent 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over three years, Tesserent grew revenue at 8.9% per year. That's a pretty good rate of top-line growth. Shareholders have endured a share price decline of 9.9% per year. This implies the market had higher expectations of Tesserent. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Tesserent's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Tesserent shareholders have gained 3.6% (in total) over the last year. What is absolutely clear is that is far preferable to the dismal 9.9% average annual loss suffered over the last three years. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with Tesserent (including 1 which is is a bit concerning) .
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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