Yahoo Finance Can You Imagine How 5G Networks' (ASX:5GN) Shareholders Feel About The 92% Share Price Increase?
5G Networks Limited (ASX:5GN) shareholders might be concerned after seeing the share price drop 10% in the last quarter. But that shouldn't obscure the pleasing returns achieved by shareholders over the last three years. In the last three years the share price is up, 92%: better than the market.
View our latest analysis for 5G Networks
5G Networks 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on 5G Networks' balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, 5G Networks' TSR for the last 3 years was 95%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!
A Different Perspective
5G Networks produced a TSR of 19% over the last year. While you don't go broke making a profit, this return was actually lower than the average market return of about 38%. But the (superior) three-year TSR of 25% per year is some consolation. Even the best companies don't see strong share price performance every year. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with 5G Networks (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
Of course 5G Networks may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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