Despite a $12m drop last week, Shanta Gold (LON:SHG) shareholders are still up 127% over 5 years

Despite a $12m drop last week, Shanta Gold (LON:SHG) shareholders are still up 127% over 5 years
Despite a $12m drop last week, Shanta Gold (LON:SHG) shareholders are still up 127% over 5 years

It’s been a sweet week for Shanta Gold Limited (LON:SHG), which are down 12%. But in stark contrast, returns over the past half-decade have impressed. In fact, the stock price is 121% higher today. So while it’s never fun to see a stock price drop, it’s important to consider a longer time horizon. Of course, that doesn’t necessarily mean it’s cheap now. Unfortunately, not all shareholders will have held onto it for the long term, so spare a thought for those caught up in the 33% decline over the past twelve months.

Given that long-term performance has been good but there has been a recent pullback of 12%, let’s see if the fundamentals match the stock price.

However, if you prefer to see where opportunities and risks are within the SHG industryyou can view our analysis of the UK metals and mining industry.

Shanta Gold has not been profitable for the last twelve months, we are unlikely to see a strong correlation between its share price and its earnings per share (EPS). Income is arguably our second best option. Shareholders of unprofitable companies generally expect strong revenue growth. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

Over the past 5 years, Shanta Gold has seen its turnover grow by 5.7% per year. Simply put, this growth rate is not impressive. By comparison, the rise in the stock price of 17% per year over the last half-decade is quite impressive. Shareholders should be pretty happy with that, though interested investors may want to take a closer look at the financials to see if the gains are truly justified. The market may be quite bullish on Shanta Gold.

The company’s revenues and profits (over time) are shown in the image below (click to see exact figures).

AIM: SHG Earnings and Revenue Growth September 2, 2022

If you are thinking of buying or selling Shanta Gold shares, you should check out this FREE detailed report on its balance sheet.

What about dividends?

In addition to measuring share price performance, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, assuming the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often much higher than the stock price return. In the case of Shanta Gold, it has posted a TSR of 127% over the last 5 years. This exceeds the performance of its share price that we mentioned earlier. This is largely the result of its dividend payments!

A different perspective

We regret to report that Shanta Gold shareholders are down 31% for the year (even including dividends). Unfortunately, this is worse than the general market decline of 10%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. Longer-term investors wouldn’t be so upset, as they would have gained 18%, every year, over five years. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Take for example the ubiquitous specter of investment risk. We have identified 1 warning sign with Shanta Gold, and understanding them should be part of your investment process.

Sure, you might find a fantastic investment by looking elsewhere. So take a look at this free list of companies that we believe will increase their profits.

Please note that the market returns quoted in this article reflect the market-weighted average returns of the shares currently trading on UK stock exchanges.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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. Despite a drop million dollars week last the shareholders Shanta Gold LONSHG are still rise on years

. #12m drop week Shanta Gold LONSHG shareholders years

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