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Does Euro Tech Holdings’s (NASDAQ:CLWT) Share Price Gain of 59% Match Its Business Performance? – Simply Wall St


One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. For example, the Euro Tech Holdings Company Limited (NASDAQ:CLWT) share price is up 59% in the last three years, clearly besting the market return of around 35% (not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 26% in the last year.

View our latest analysis for Euro Tech Holdings

While Euro Tech Holdings made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last 3 years Euro Tech Holdings saw its revenue shrink by 2.7% per year. Despite the lack of revenue growth, the stock has returned 17%, compound, over three years. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.

You can see how earnings and revenue have changed over time in the image below.

NasdaqCM:CLWT Income Statement, September 22nd 2019
NasdaqCM:CLWT Income Statement, September 22nd 2019

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Euro Tech Holdings’s earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We’ve already covered Euro Tech Holdings’s share price action, but we should also mention its 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. Euro Tech Holdings hasn’t been paying dividends, but its TSR of 76% exceeds its share price return of 59%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

We’re pleased to report that Euro Tech Holdings shareholders have received a total shareholder return of 26% over one year. That gain is better than the annual TSR over five years, which is 5.7%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. You could get a better understanding of Euro Tech Holdings’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Of course Euro Tech Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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