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Many investors define successful investing as beating the market average over the long term. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Murray Cod Australia Limited (ASX:MCA) shareholders have had that experience, with the share price dropping 52% in three years, versus a market decline of about 10.0%. Even worse, it's down 19% in about a month, which isn't fun at all.
So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.
Because Murray Cod Australia made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years Murray Cod Australia saw its revenue shrink by 6.1% per year. That is not a good result. With revenue in decline, and profit but a dream, we can understand why the share price has been declining at 15% per year. Of course, it's the future that will determine whether today's price is a good one. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. It might be well worthwhile taking a look at our free report on Murray Cod Australia's earnings, revenue and cash flow.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Murray Cod Australia's 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. We note that Murray Cod Australia's TSR, at -49% is higher than its share price return of -52%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.