When you buy and hold a stock for the long term, you definitely want it to provide a positive return. Furthermore, you’d generally like to see the share price rise faster than the market Unfortunately for shareholders, while the Tips Industries Limited (NSE:TIPSINDLTD) share price is up 67% in the last five years, that’s less than the market return. Unfortunately the share price is down 41% in the last year.
View our latest analysis for Tips Industries
Given that Tips Industries only made minimal earnings in the last twelve months, we’ll focus on revenue to gauge its business development. As a general rule, if the market is looking past earnings to focus on revenue, there is a hope for, or expectation of, strong growth. As you can imagine, it’s easy to imagine a fast growing company becoming (potentially very) profitable, but when revenue growth slows, then the potential upside often seems less impressive.
Over the last half decade Tips Industries’s revenue has actually been trending down at about 0.9% per year. The stock is only up 11% for each year during the period. That’s pretty decent given the top line decline, and lack of profits. Of course, a closer look at the bottom line – and any available analyst forecasts – could reveal an opportunity (if they point to future growth).
Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Tips Industries the TSR over the last 5 years was 82%, which is better than the share price return mentioned above. And there’s no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
We regret to report that Tips Industries shareholders are down 40% for the year (even including dividends). Unfortunately, that’s worse than the broader market decline of 4.1%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Longer term investors wouldn’t be so upset, since they would have made 13%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. Before deciding if you like the current share price, check how Tips Industries scores on these 3 valuation metrics.