Shareholders have faith in loss-making Bumech (WSE:BMC) as stock climbs 35% in past week, taking five-year gain to 437%

Bumech S.A. (WSE:BMC) shareholders might understandably be very concerned that the share price has dropped 46% in the last quarter. But over five years returns have been remarkably great. Indeed, the share price is up a whopping 392% in that time. So we don't think the recent decline in the share price means its story is a sad one. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price. While the returns over the last 5 years have been good, we do feel sorry for those shareholders who haven't held shares that long, because the share price is down 68% in the last three years.

Since it's been a strong week for Bumech shareholders, let's have a look at trend of the longer term fundamentals.

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Given that Bumech 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Bumech can boast revenue growth at a rate of 9.0% per year. That's a fairly respectable growth rate. Arguably it's more than reflected in the very strong share price gain of 38% a year over a half a decade. We usually like strong growth stocks but it does seem the market already appreciates this one quite well!

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Bumech's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Bumech shareholders, and that cash payout contributed to why its TSR of 437%, over the last 5 years, is better than the share price return.

A Different Perspective

It's good to see that Bumech has rewarded shareholders with a total shareholder return of 171% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 40% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Bumech (of which 3 are a bit unpleasant!) you should know about.

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