Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Imagine if you held Cineworld Group plc (LON:CINE) for half a decade as the share price tanked 96%. And we doubt long term believers are the only worried holders, since the stock price has declined 68% over the last twelve months. The falls have accelerated recently, with the share price down 21% in the last three months. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
Check out our latest analysis for Cineworld Group
Because Cineworld 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last half decade, Cineworld Group saw its revenue increase by 0.4% per year. That's far from impressive given all the money it is losing. Nonetheless, it's fair to say the rapidly declining share price (down 14%, compound, over five years) suggests the market is very disappointed with this level of growth. While we're definitely wary of the stock, after that kind of performance, it could be an over-reaction. We'd recommend focussing any further research on the likelihood of profitability in the foreseeable future, given the muted revenue growth.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Cineworld Group is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Cineworld Group will earn in the future (free analyst consensus estimates)
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Cineworld Group's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Its history of dividend payouts mean that Cineworld Group's TSR, which was a 88% drop over the last 5 years, was not as bad as the share price return.