Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Dignity plc (LON:DTY) share price has soared 124% in the last year. Most would be very happy with that, especially in just one year! It's also up 22% in about a month. We note that Dignity reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report. In contrast, the longer term returns are negative, since the share price is 30% lower than it was three years ago.
View our latest analysis for Dignity
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Over the last twelve months Dignity went from profitable to unprofitable. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. We might get a clue to explain the share price move by looking to other metrics.
We think that the revenue growth of 5.4% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It's good to see that Dignity has rewarded shareholders with a total shareholder return of 124% in the last twelve months. That certainly beats the loss of about 12% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Dignity better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Dignity you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.