MGM Wireless Limited (ASX:MWR) shareholders might be concerned after seeing the share price drop 11% in the last quarter. In contrast, the return over three years has been impressive. In fact, the share price is up a full 287% compared to three years ago. So the recent fall in the share price should be viewed in that context. The thing to consider is whether the underlying business is doing well enough to support the current price.
Check out our latest analysis for MGM Wireless
Given that MGM Wireless 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last 3 years MGM Wireless saw its revenue grow at 18% per year. That’s pretty nice growth. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 57% per year over three years. The business has made good progress on the top line, but the market is extrapolating the growth. It would be worth thinking about when profits will flow, since that milestone will attract more attention.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
If you are thinking of buying or selling MGM Wireless stock, you should check out this FREE detailed report on its balance sheet.
A Dividend Lost
The value of past dividends are accounted for in the total shareholder return (TSR), but not in the share price return mentioned above. In some ways, TSR is a better measure of how well an investment has performed. Over the last 3 years, MGM Wireless generated a TSR of 303%, which is, of course, better than the share price return. Even though the company isn’t paying dividends at the moment, it has done in the past.
A Different Perspective
We’re pleased to report that MGM Wireless shareholders have received a total shareholder return of 267% over one year. That gain is better than the annual TSR over five years, which is 26%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on MGM Wireless it might be wise to click here to see if insiders have been buying or selling shares.