Yahoo Finance Shareholders Are Thrilled That The Whitebark Energy (ASX:WBE) Share Price Increased 200%
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you pick the right stock, you can make a lot more than 100%. For example, the Whitebark Energy Limited (ASX:WBE) share price has soared 200% in the last year. Most would be very happy with that, especially in just one year! Unfortunately the longer term returns are not so good, with the stock falling 36% in the last three years.
Check out our latest analysis for Whitebark Energy
We don't think Whitebark Energy's revenue of AU$1,877,190 is enough to establish significant demand. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Whitebark Energy finds fossil fuels with an exploration program, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Whitebark Energy investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.
Our data indicates that Whitebark Energy had AU$6.5m more in total liabilities than it had cash, when it last reported in June 2019. That makes it extremely high risk, in our view. So the fact that the stock is up 73% in the last year shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. You can see in the image below, how Whitebark Energy's cash levels have changed over time (click to see the values). The image below shows how Whitebark Energy's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Whitebark Energy's total shareholder return (TSR) and its 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. We note that Whitebark Energy's TSR, at 200% is higher than its share price return of 200%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It's good to see that Whitebark Energy has rewarded shareholders with a total shareholder return of 200% in the last twelve months. That certainly beats the loss of about 14% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. You could get a better understanding of Whitebark Energy's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
But note: Whitebark Energy may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
