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Those Who Purchased TORC Oil & Gas (TSE:TOG) Shares Three Years Ago Have A 45% Loss To Show For It

Simply Wall St

While it may not be enough for some shareholders, we think it is good to see the TORC Oil & Gas Ltd. (TSE:TOG) share price up 21% in a single quarter. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 45% in the last three years, falling well short of the market return.

View our latest analysis for TORC Oil & Gas

TORC Oil & Gas 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last three years, TORC Oil & Gas saw its revenue grow by 26% per year, compound. That's well above most other pre-profit companies. While its revenue increased, the share price dropped at a rate of 18% per year. That seems like an unlucky result for holders. It seems likely that actual growth fell short of shareholders' expectations. Still, with high hopes now tempered, now might prove to be an opportunity to buy.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

TSX:TOG Income Statement, January 3rd 2020

If you are thinking of buying or selling TORC Oil & Gas stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, TORC Oil & Gas's TSR for the last 3 years was -37%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

While the broader market gained around 19% in the last year, TORC Oil & Gas shareholders lost 0.6% (even including dividends) . Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, longer term shareholders are suffering worse, given the loss of 4.8% doled out over the last five years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. If you would like to research TORC Oil & Gas in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

We will like TORC Oil & Gas better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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.

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. Thank you for reading.