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High Arctic Energy Services (TSE:HWO) adds CA$6.9m to market cap in the past 7 days, though investors from five years ago are still down 47%

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It is a pleasure to report that the High Arctic Energy Services Inc (TSE:HWO) is up 37% in the last quarter. But that doesn't change the fact that the returns over the last five years have been less than pleasing. You would have done a lot better buying an index fund, since the stock has dropped 58% in that half decade.

While the stock has risen 11% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

View our latest analysis for High Arctic Energy Services

High Arctic Energy Services isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last five years High Arctic Energy Services saw its revenue shrink by 27% per year. That puts it in an unattractive cohort, to put it mildly. Arguably, the market has responded appropriately to this business performance by sending the share price down 10% (annualized) in the same time period. We don't generally like to own companies that lose money and don't grow revenues. You might be better off spending your money on a leisure activity. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
TSX:HWO Earnings and Revenue Growth May 22nd 2024

If you are thinking of buying or selling High Arctic Energy Services stock, you should check out this FREE detailed report on its balance sheet.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between High Arctic Energy Services' total shareholder return (TSR) and its share price change, which we've covered above. 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. Dividends have been really beneficial for High Arctic Energy Services shareholders, and that cash payout explains why its total shareholder loss of 47%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

High Arctic Energy Services' TSR for the year was broadly in line with the market average, at 16%. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 8%, which was endured over half a decade. We're pretty skeptical of turnaround stories, but it's good to see the recent share price recovery. It's always interesting to track share price performance over the longer term. But to understand High Arctic Energy Services better, we need to consider many other factors. Take risks, for example - High Arctic Energy Services has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about.


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