Reflecting on Millicom International Cellular's (NASDAQ:TIGO) Share Price Returns Over The Last Three Years

For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Millicom International Cellular S.A. (NASDAQ:TIGO) shareholders have had that experience, with the share price dropping 41% in three years, versus a market return of about 63%. Unhappily, the share price slid 1.9% in the last week.

See our latest analysis for Millicom International Cellular

Given that Millicom International Cellular 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. 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.

Over three years, Millicom International Cellular grew revenue at 2.8% per year. That's not a very high growth rate considering it doesn't make profits. Indeed, the stock dropped 12% over the last three years. Shareholders will probably be hoping growth picks up soon. But the real upside for shareholders will be if the company can start generating profits.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Millicom International Cellular in this interactive graph of future profit estimates.

What about the Total Shareholder Return (TSR)?

We've already covered Millicom International Cellular'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. Millicom International Cellular's TSR of was a loss of 35% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

Millicom International Cellular shareholders are up 34% for the year. But that return falls short of the market. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 4% endured over half a decade. So this might be a sign the business has turned its fortunes around. 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. To that end, you should be aware of the 1 warning sign we've spotted with Millicom International Cellular .

Millicom International Cellular is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

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. 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.

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