T&G Global Limited (NZSE:TGG) shareholders should be happy to see the share price up 17% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. After all, the share price is down 31% in the last three years, significantly under-performing the market.
It’s worthwhile assessing if the company’s economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let’s do just that.
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T&G Global 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. 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 three years, T&G Global saw its revenue grow by 0.5% per year, compound. Given it’s losing money in pursuit of growth, we are not really impressed with that. Indeed, the stock dropped 9% over the last three years. If revenue growth accelerates, we might see the share price bounce. But the real upside for shareholders will be if the company can start generating profits.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
It’s good to see that T&G Global has rewarded shareholders with a total shareholder return of 14% in the last twelve months. There’s no doubt those recent returns are much better than the TSR loss of 5% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It’s always interesting to track share price performance over the longer term. But to understand T&G Global better, we need to consider many other factors. For instance, we’ve identified 1 warning sign for T&G Global that you should be aware of.