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Many investors define successful investing as beating the market average over the long term. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term C&C Group plc (LON:CCR) shareholders, since the share price is down 44% in the last three years, falling well short of the market return of around 18%.
Since C&C Group has shed UK£93m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Check out our latest analysis for C&C Group
C&C Group wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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 would hope for good top-line growth to make up for the lack of earnings.
In the last three years, C&C Group saw its revenue grow by 9.9% per year, compound. That's a fairly respectable growth rate. Shareholders have endured a share price decline of 13% per year. This implies the market had higher expectations of C&C Group. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So we recommend checking out this free report showing consensus forecasts
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of C&C Group, it has a TSR of -40% for the last 3 years. That exceeds its share price return that we previously mentioned. The dividends paid by the company have thusly boosted the total shareholder return.