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Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Motorpoint Group Plc (LON:MOTR) share price is 74% higher than it was a year ago, much better than the market return of around 7.6% (not including dividends) in the same period. That's a solid performance by our standards! On the other hand, longer term shareholders have had a tougher run, with the stock falling 52% in three years.
The past week has proven to be lucrative for Motorpoint Group investors, so let's see if fundamentals drove the company's one-year performance.
Check out our latest analysis for Motorpoint Group
Motorpoint Group 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 desire strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Motorpoint Group actually shrunk its revenue over the last year, with a reduction of 25%. Despite the lack of revenue growth, the stock has returned a solid 74% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
You can see below how earnings and revenue have changed over time (discover 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
We're pleased to report that Motorpoint Group shareholders have received a total shareholder return of 74% over one year. That certainly beats the loss of about 5% 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 Motorpoint Group better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Motorpoint Group (including 1 which is potentially serious) .
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.