We think intelligent long term investing is the way to go. But that doesn’t mean long term investors can avoid big losses. For example the PHSC plc (LON:PHSC) share price dropped 69% over five years. We certainly feel for shareholders who bought near the top. Furthermore, it’s down 36% in about a quarter. That’s not much fun for holders. But this could be related to the weak market, which is down 25% in the same period.
Check out our latest analysis for PHSC
Given that PHSC 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last five years PHSC saw its revenue shrink by 7.9% per year. While far from catastrophic that is not good. With neither profit nor revenue growth, the loss of 21% per year doesn’t really surprise us. The chance of imminent investor enthusiasm for this stock seems slimmer than Louise Brooks. Ultimately, it may be worth watching – should revenue pick up, the share price might follow.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
AIM:PHSC Income Statement April 8th 2020
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of PHSC’s earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and 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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for PHSC the TSR over the last 5 years was -58%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
We’re pleased to report that PHSC shareholders have received a total shareholder return of 5.2% over one year. And that does include the dividend. Notably the five-year annualised TSR loss of 16% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It’s always interesting to track share price performance over the longer term. But to understand PHSC better, we need to consider many other factors. Take risks, for example – PHSC has 4 warning signs (and 2 which make us uncomfortable) we think you should know about.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on GB 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.