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Green Plains Inc. (NASDAQ:GPRE) shareholders might be concerned after seeing the share price drop 20% in the last quarter. But at least the stock is up over the last five years. In that time, it is up 63%, which isn't bad, but is below the market return of 80%.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
See our latest analysis for Green Plains
Because Green Plains 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last 5 years Green Plains saw its revenue grow at 7.9% per year. That's a pretty good long term growth rate. While the share price has beat the market, compounding at 10% yearly, over five years, there's certainly some potential that the market hasn't fully considered the growth track record. If revenue growth can maintain for long enough, it's likely profits will flow. There's no doubt that it can be difficult to value pre-profit companies.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Green Plains will earn in the future (free profit forecasts).
What About The Total Shareholder Return (TSR)?
We've already covered Green Plains' share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Green Plains' TSR of 65% for the 5 years exceeded its share price return, because it has paid dividends.
A Different Perspective
Investors in Green Plains had a tough year, with a total loss of 25%, against a market gain of about 16%. 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. Longer term investors wouldn't be so upset, since they would have made 11%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.