When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of Lloyd Fonds AG (ETR:L1OA) stock is up an impressive 240% over the last five years. We note the stock price is up 3.4% in the last seven days.
We don't think that Lloyd Fonds's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last 5 years Lloyd Fonds saw its revenue shrink by 9.3% per year. On the other hand, the share price done the opposite, gaining 28%, compound, each year. It's a good reminder that expectations about the future, not the past history, always impact share prices. Still, we are a bit cautious in this kind of situation.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We know that Lloyd Fonds has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling Lloyd Fonds stock, you should check out this free report showing analyst profit forecasts.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Lloyd Fonds's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Lloyd Fonds's TSR of 264% for the 5 years exceeded its share price return, because it has paid dividends.
A Different Perspective
It's nice to see that Lloyd Fonds shareholders have received a total shareholder return of 5.9% over the last year. However, that falls short of the 29% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. Shareholders might want to examine this detailed historical graph of past 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 DE 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 email@example.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.