Yahoo Finance Shareholders in Panoramic Resources (ASX:PAN) are in the red if they invested five years ago
Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. Imagine if you held Panoramic Resources Limited (ASX:PAN) for half a decade as the share price tanked 92%. And we doubt long term believers are the only worried holders, since the stock price has declined 79% over the last twelve months. Furthermore, it's down 31% in about a quarter. That's not much fun for holders. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
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.
View our latest analysis for Panoramic Resources
Panoramic Resources isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
In the last half decade, Panoramic Resources saw its revenue increase by 51% per year. That's better than most loss-making companies. So it's not at all clear to us why the share price sunk 14% throughout that time. It could be that the stock was over-hyped before. While there might be an opportunity here, you'd want to take a close look at the balance sheet strength.
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. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling Panoramic Resources stock, you should check out this free report showing analyst profit forecasts.
What About The Total Shareholder Return (TSR)?
Investors should note that there's a difference between Panoramic Resources' total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that Panoramic Resources' TSR, which was a 90% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
Investors in Panoramic Resources had a tough year, with a total loss of 79%, against a market gain of about 4.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 14% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Panoramic Resources better, we need to consider many other factors. Even so, be aware that Panoramic Resources is showing 2 warning signs in our investment analysis , you should know about...
Panoramic Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
