Yahoo Finance If You Had Bought Metro Bank (LON:MTRO) Stock Three Years Ago, You'd Be Sitting On A 97% Loss, Today
Metro Bank PLC (LON:MTRO) shareholders should be happy to see the share price up 14% in the last month. But that doesn't change the fact that the returns over the last three years have been stomach churning. In that time the share price has melted like a snowball in the desert, down 97%. So it's about time shareholders saw some gains. Of course the real question is whether the business can sustain a turnaround.
We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
View our latest analysis for Metro Bank
Because Metro Bank made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last three years, Metro Bank saw its revenue grow by 25% per year, compound. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 70% a year in the same time period. You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. If the company is low on cash, it may have to raise capital soon.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Metro Bank's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Metro Bank shareholders are down 88% for the year, falling short of the market return. Meanwhile, the broader market slid about 20%, likely weighing on the stock. The three-year loss of 70% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. For example, we've discovered 2 warning signs for Metro Bank (1 is a bit concerning!) that you should be aware of before investing here.
Of course Metro Bank 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 GB 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.
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