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Resolute Mining Limited (ASX:RSG) shareholders should be happy to see the share price up 23% in the last month. But if you look at the last five years the returns have not been good. After all, the share price is down 45% in that time, significantly under-performing the market.
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.
View our latest analysis for Resolute Mining
Because Resolute Mining 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
In the last half decade, Resolute Mining saw its revenue increase by 6.9% per year. That's a pretty good rate for a long time period. We doubt many shareholders are ok with the fact the share price has fallen 8% each year for half a decade. Clearly, the expectations from back then have not been satisfied. The lesson is that if you buy shares in a money losing company you could end up losing money.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Take a more thorough look at Resolute Mining's financial health with this free report on its balance sheet.
What About The Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Resolute Mining'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. Its history of dividend payouts mean that Resolute Mining's TSR, which was a 38% drop over the last 5 years, was not as bad as the share price return.
A Different Perspective
It's nice to see that Resolute Mining shareholders have received a total shareholder return of 16% over the last year. There's no doubt those recent returns are much better than the TSR loss of 7% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. You could get a better understanding of Resolute Mining's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.