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Low-cost index funds make it easy to achieve average market returns. But across the board there are plenty of stocks that underperform the market. For example, the Tidewater Midstream and Infrastructure Ltd. (TSE:TWM) share price return of 22% over three years lags the market return in the same period. Disappointingly, the share price is down 9.8% in the last year.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
Check out our latest analysis for Tidewater Midstream and Infrastructure
Tidewater Midstream and Infrastructure isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Tidewater Midstream and Infrastructure's revenue trended up 42% each year over three years. That's much better than most loss-making companies. The stock is up 7% over that time - a decent but not impressive return. We would have thought the top-line growth might have impressed buyers more. It could be that the stock was previously over-priced, or its losses might worry the market. But you might want to take a closer look at this one.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts
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 incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Tidewater Midstream and Infrastructure the TSR over the last 3 years was 37%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
While the broader market gained around 2.7% in the last year, Tidewater Midstream and Infrastructure shareholders lost 5.9% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.6% over the last half decade. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Tidewater Midstream and Infrastructure you should be aware of, and 2 of them shouldn't be ignored.