Yahoo Finance Should Pan Orient Energy (CVE:POE) Be Disappointed With Their 55% Profit?
These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Pan Orient Energy Corp. (CVE:POE) share price is 55% higher than it was a year ago, much better than the market return of around -1.8% (not including dividends) in the same period. That's a solid performance by our standards! However, the stock hasn't done so well in the longer term, with the stock only up 19% in three years.
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View our latest analysis for Pan Orient Energy
Pan Orient Energy didn't report any revenue in the last year, however we note that it only reports the profit & loss value of its Thai subsidiary, which is generating a substantial amount of oil revenues, and approximately breaking even from a profit and loss perspective.
As a general rule, if a company is losing money, then it is a high risk investment. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Pan Orient Energy has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
When it last reported its balance sheet in March 2019, Pan Orient Energy could boast a strong position, with cash in excess of all liabilities of CA$21m. This gives management the flexibility to drive business growth, without worrying too much about cash reserves. And given that the share price has shot up 55% in the last year, its fair to say investors are liking management's vision for the future. You can see in the image below, how Pan Orient Energy's cash levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that is unprofitable. However you can take a look at whether insiders have been buying up shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.
What about the Total Shareholder Return (TSR)?
We've already covered Pan Orient Energy's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Pan Orient Energy hasn't been paying dividends, but its TSR of 55% exceeds its share price return of 55%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
It's good to see that Pan Orient Energy has rewarded shareholders with a total shareholder return of 55% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4.8% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before spending more time on Pan Orient Energy it might be wise to click here to see if insiders have been buying or selling shares.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
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.
