The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. To wit, the Grafenia Plc (LON:GRA) share price has flown 115% in the last three years. How nice for those who held the stock! In more good news, the share price has risen 19% in thirty days.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
Check out our latest analysis for Grafenia
Grafenia 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.
In the last 3 years Grafenia saw its revenue shrink by 11% per year. So the share price gain of 29% per year is quite surprising. It's fair to say shareholders are definitely counting on a bright future.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Grafenia's earnings, revenue and cash flow.
What About The Total Shareholder Return (TSR)?
We've already covered Grafenia's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Grafenia's TSR of 121% for the 3 years exceeded its share price return, because it has paid dividends.
A Different Perspective
It's nice to see that Grafenia shareholders have received a total shareholder return of 101% over the last year. Notably the five-year annualised TSR loss of 0.8% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Grafenia (1 shouldn't be ignored!) that you should be aware of before investing here.