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This week we saw the Delivery Hero SE (ETR:DHER) share price climb by 13%. But that can't change the reality that over the longer term (five years), the returns have been really quite dismal. The share price has failed to impress anyone , down a sizable 65% during that time. So we're hesitant to put much weight behind the short term increase. We'd err towards caution given the long term under-performance.
On a more encouraging note the company has added €861m to its market cap in just the last 7 days, so let's see if we can determine what's driven the five-year loss for shareholders.
Delivery Hero 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. 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.
In the last half decade, Delivery Hero saw its revenue increase by 35% per year. That's better than most loss-making companies. Unfortunately for shareholders the share price has dropped 11% per year - disappointing considering the growth. This could mean high expectations have been tempered, potentially because investors are looking to the bottom line. Given the revenue growth we'd consider the stock to be quite an interesting prospect if the company has a clear path to profitability.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Delivery Hero is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Delivery Hero in this interactive graph of future profit estimates.
A Different Perspective
Delivery Hero shareholders gained a total return of 2.7% during the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 11% endured over half a decade. It could well be that the business is stabilizing. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).