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Every investor on earth makes bad calls sometimes. But you have a problem if you face massive losses more than once in a while. So take a moment to sympathize with the long term shareholders of Branicks Group AG (ETR:DIC), who have seen the share price tank a massive 87% over a three year period. That would certainly shake our confidence in the decision to own the stock. And the ride hasn't got any smoother in recent times over the last year, with the price 53% lower in that time. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
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.
See our latest analysis for Branicks Group
Because Branicks Group made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years, Branicks Group saw its revenue grow by 7.7% per year, compound. Given it's losing money in pursuit of growth, we are not really impressed with that. But the share price crash at 23% per year does seem a bit harsh! While we're definitely wary of the stock, after that kind of performance, it could be an over-reaction. Before considering a purchase, take a look at the losses the company is racking up.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Branicks Group's financial health with this free report on its balance sheet.
What About The Total Shareholder Return (TSR)?
We've already covered Branicks Group's share price action, but we should also mention its total shareholder return (TSR). 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 Branicks Group shareholders, and that cash payout explains why its total shareholder loss of 85%, over the last 3 years, isn't as bad as the share price return.
A Different Perspective
Investors in Branicks Group had a tough year, with a total loss of 53%, against a market gain of about 10.0%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 12% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Branicks Group better, we need to consider many other factors. For example, we've discovered 2 warning signs for Branicks Group (1 shouldn't be ignored!) that you should be aware of before investing here.