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Can You Imagine How Empire Industries's (CVE:EIL) Shareholders Feel About The 11% Share Price Increase?

Simply Wall St

By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. For example, the Empire Industries Ltd. (CVE:EIL) share price is up 11% in the last three years, clearly besting than the market return of around 8.6% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 2.2%.

Check out our latest analysis for Empire Industries

Empire Industries isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last three years Empire Industries has grown its revenue at 6.3% annually. That's not a very high growth rate considering it doesn't make profits. In that time the share price is up 3.5% per year, which is not unreasonable given the revenue gorwth. Ultimately, the important thing is whether the company is trending to profitability. In this sort of situation it can be worth putting the stock on your watchlist. If it can become profitable, then even moderate revenue growth could grow profits quickly.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

TSXV:EIL Income Statement, September 11th 2019

If you are thinking of buying or selling Empire Industries stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Empire Industries provided a TSR of 2.2% over the year. That's fairly close to the broader market return. To take a positive view, the gain is pleasing, and it sure beats annualized TSR loss of 1.4%, which was endured over half a decade. While 'turnarounds seldom turn' there are green shoots for Empire Industries. You could get a better understanding of Empire Industries's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.