GFL Environmental (TSE:GFL) shareholders have earned a 9.4% CAGR over the last five years

When you buy and hold a stock for the long term, you definitely want it to provide a positive return. Furthermore, you'd generally like to see the share price rise faster than the market. But GFL Environmental Inc. (TSE:GFL) has fallen short of that second goal, with a share price rise of 56% over five years, which is below the market return. The last year has been disappointing, with the stock price down 10% in that time.

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

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Given that GFL Environmental only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last 5 years GFL Environmental saw its revenue grow at 13% per year. That's a pretty good long term growth rate. While the share price has gained 9% per year for five years, that's hardly amazing considering the market also rose. You could even argue that the share price was over optimistic, previously.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

GFL Environmental is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think GFL Environmental will earn in the future (free analyst consensus estimates)

A Different Perspective

Investors in GFL Environmental had a tough year, with a total loss of 10.0% (including dividends), against a market gain of about 30%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 9% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Case in point: We've spotted 3 warning signs for GFL Environmental you should be aware of, and 2 of them are a bit concerning.

But note: GFL Environmental may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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