The Urbas Grupo Financiero (BME:UBS) Share Price Is Down 77% So Some Shareholders Are Rather Upset

Urbas Grupo Financiero, S.A. (BME:UBS) shareholders are doubtless heartened to see the share price bounce 50% in just one week. But spare a thought for the long term holders, who have held the stock as it bled value over the last five years. Like a ship taking on water, the share price has sunk 77% in that time. It's true that the recent bounce could signal the company is turning over a new leaf, but we are not so sure. The important question is if the business itself justifies a higher share price in the long term.

View our latest analysis for Urbas Grupo Financiero

While Urbas Grupo Financiero made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last five years Urbas Grupo Financiero saw its revenue shrink by 5.4% per year. While far from catastrophic that is not good. The share price fall of 25% (per year, over five years) is a stern reminder that money-losing companies are expected to grow revenue. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn't grow revenue. Fear of becoming a 'bagholder' may be keeping people away from this stock.

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

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Urbas Grupo Financiero's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

The total return of 23% received by Urbas Grupo Financiero shareholders over the last year isn't far from the market return of -22%. However, the loss over the last year isn't as bad as the 25% per annum loss investors have suffered over the last half decade. It could well be that the business has begun to stabilize, although we'd be hesitant to buy without clear information suggesting the company will grow. 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 Urbas Grupo Financiero is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...

But note: Urbas Grupo Financiero 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 ES 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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