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Statistically speaking, long term investing is a profitable endeavour. But no-one is immune from buying too high. To wit, the Time Out Group plc (LON:TMO) share price managed to fall 55% over five long years. That is extremely sub-optimal, to say the least.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
View our latest analysis for Time Out Group
Given that Time Out Group didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over five years, Time Out Group grew its revenue at 13% per year. That's a pretty good rate for a long time period. The share price return isn't so respectable with an annual loss of 9% over the period. It seems probably that the business has failed to live up to initial expectations. That could lead to an opportunity if the company is going to become profitable sooner rather than later.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Time Out Group in this interactive graph of future profit estimates.
A Different Perspective
Time Out Group shareholders are down 1.9% for the year, but the market itself is up 11%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 9% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Time Out Group better, we need to consider many other factors. Even so, be aware that Time Out Group is showing 1 warning sign in our investment analysis , you should know about...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: most of them are flying under the radar).