Yahoo Finance The past five years for Gulf Keystone Petroleum (LON:GKP) investors has not been profitable
While it may not be enough for some shareholders, we think it is good to see the Gulf Keystone Petroleum Limited (LON:GKP) share price up 15% in a single quarter. But over the last half decade, the stock has not performed well. After all, the share price is down 51% in that time, significantly under-performing the market.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Gulf Keystone Petroleum
Given that Gulf Keystone Petroleum 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last half decade, Gulf Keystone Petroleum saw its revenue increase by 10% per year. That's a pretty good rate for a long time period. The share price, meanwhile, has fallen 9% compounded, over five years. That suggests the market is disappointed with the current growth rate. A pessimistic market can create opportunities.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Gulf Keystone Petroleum will earn in the future (free profit forecasts).
What About The Total Shareholder Return (TSR)?
We've already covered Gulf Keystone Petroleum'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. Gulf Keystone Petroleum's TSR of was a loss of 6.6% for the 5 years. That wasn't as bad as its share price return, because it has paid dividends.
A Different Perspective
Gulf Keystone Petroleum shareholders are down 16% for the year, but the market itself is up 7.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.3% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Gulf Keystone Petroleum is showing 1 warning sign in our investment analysis , you should know about...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British 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.
