U and I Group's(LON:UAI) Share Price Is Down 73% Over The Past Five Years.
Statistically speaking, long term investing is a profitable endeavour. But unfortunately, some companies simply don't succeed. For example the U and I Group PLC (LON:UAI) share price dropped 73% over five years. We certainly feel for shareholders who bought near the top. And it's not just long term holders hurting, because the stock is down 49% in the last year. Furthermore, it's down 27% in about a quarter. That's not much fun for holders.
View our latest analysis for U and I Group
U and I Group 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. Shareholders of unprofitable companies usually expect strong 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 five years U and I Group saw its revenue shrink by 14% per year. That's definitely a weaker result than most pre-profit companies report. So it's not altogether surprising to see the share price down 12% per year in the same time period. We don't think this is a particularly promising picture. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think U and I Group will earn in the future (free profit forecasts).
What about the Total Shareholder Return (TSR)?
We've already covered U and I Group's share price action, but we should also mention its 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. Dividends have been really beneficial for U and I Group shareholders, and that cash payout explains why its total shareholder loss of 64%, over the last 5 years, isn't as bad as the share price return.
A Different Perspective
While the broader market lost about 9.3% in the twelve months, U and I Group shareholders did even worse, losing 48%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 U and I Group is showing 3 warning signs in our investment analysis , and 2 of those are concerning...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.
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