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What Type Of Returns Would Virgin Money UK's(LON:VMUK) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

While not a mind-blowing move, it is good to see that the Virgin Money UK PLC (LON:VMUK) share price has gained 22% in the last three months. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 69%. So it's good to see it climbing back up. While many would remain nervous, there could be further gains if the business can put its best foot forward.

See our latest analysis for Virgin Money UK

Virgin Money UK 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

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Over three years, Virgin Money UK grew revenue at 14% per year. That's a fairly respectable growth rate. So some shareholders would be frustrated with the compound loss of 19% per year. To be frank we're surprised to see revenue growth and share price growth diverge so strongly. So this is one stock that might be worth investigating further, or even adding to your watchlist.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

Virgin Money UK is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Virgin Money UK will earn in the future (free analyst consensus estimates)

A Different Perspective

The last twelve months weren't great for Virgin Money UK shares, which performed worse than the market, costing holders 39%. The market shed around 7.9%, no doubt weighing on the stock price. The three-year loss of 19% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. Even so, be aware that Virgin Money UK is showing 1 warning sign in our investment analysis , you should know about...

Of course Virgin Money UK 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 GB 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.