In This Article:
Tortilla Mexican Grill plc (LON:MEX) shareholders will doubtless be very grateful to see the share price up 35% in the last quarter. But in truth the last year hasn't been good for the share price. In fact the stock is down 34% in the last year, well below the market return.
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 Tortilla Mexican Grill
Given that Tortilla Mexican Grill 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Tortilla Mexican Grill grew its revenue by 43% over the last year. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 34%. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Tortilla Mexican Grill stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Given that the market gained 0.2% in the last year, Tortilla Mexican Grill shareholders might be miffed that they lost 34%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's great to see a nice little 35% rebound in the last three months. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Tortilla Mexican Grill , and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB exchanges.