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It hasn't been the best quarter for Syrah Resources Limited (ASX:SYR) shareholders, since the share price has fallen 12% in that time. While that might be a setback, it doesn't negate the nice returns received over the last twelve months. To wit, it had solidly beat the market, up 48%.
While the stock has fallen 7.0% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
View our latest analysis for Syrah Resources
Given that Syrah Resources 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Syrah Resources grew its revenue by 169% last year. That's stonking growth even when compared to other loss-making stocks. While the share price gain of 48% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Syrah Resources. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Syrah Resources stock, you should check out this FREE detailed report on its balance sheet.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Syrah Resources' total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Syrah Resources hasn't been paying dividends, but its TSR of 50% exceeds its share price return of 48%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
It's good to see that Syrah Resources has rewarded shareholders with a total shareholder return of 50% in the last twelve months. That certainly beats the loss of about 6% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Syrah Resources (at least 1 which is potentially serious) , and understanding them should be part of your investment process.