Yahoo Finance Innergex Renewable Energy (TSE:INE shareholders incur further losses as stock declines 4.5% this week, taking three-year losses to 61%
Investing in stocks inevitably means buying into some companies that perform poorly. But the long term shareholders of Innergex Renewable Energy Inc. (TSE:INE) have had an unfortunate run in the last three years. Regrettably, they have had to cope with a 66% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 45% in the last year. Furthermore, it's down 14% in about a quarter. That's not much fun for holders.
Since Innergex Renewable Energy has shed CA$75m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Innergex Renewable Energy
Given that Innergex Renewable Energy didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good 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.
Over three years, Innergex Renewable Energy grew revenue at 16% per year. That's a fairly respectable growth rate. That contrasts with the weak share price, which has fallen 18% compounded, over three years. To be frank we're surprised to see revenue growth and share price growth diverge so strongly. So this is one stock that might be worth investigating further, or even adding to your watchlist.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
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. You can see what analysts are predicting for Innergex Renewable Energy in this interactive graph of future profit estimates.
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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 Innergex Renewable Energy the TSR over the last 3 years was -61%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
Innergex Renewable Energy shareholders are down 42% for the year (even including dividends), but the market itself is up 6.9%. 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 6% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Innergex Renewable Energy (of which 1 is a bit concerning!) you should know about.
Innergex Renewable Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Canadian exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
