Sharp (TSE:6753) investors are sitting on a loss of 28% if they invested three years ago

Simply Wall St · 08/31 23:26

Sharp Corporation (TSE:6753) shareholders should be happy to see the share price up 16% in the last month. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 31% in the last three years, significantly under-performing the market.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

See our latest analysis for Sharp

Given that Sharp 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. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last three years Sharp saw its revenue shrink by 2.5% per year. That is not a good result. The stock has disappointed holders over the last three years, falling 9%, annualized. And with no profits, and weak revenue, are you surprised? However, in this kind of situation you can sometimes find opportunity, where sentiment is negative but the company is actually making good progress.

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

earnings-and-revenue-growth
TSE:6753 Earnings and Revenue Growth August 31st 2024

Take a more thorough look at Sharp's financial health with this free report on its balance sheet.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Sharp's total shareholder return (TSR) and its share price change, which we've covered above. 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. Dividends have been really beneficial for Sharp shareholders, and that cash payout explains why its total shareholder loss of 28%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

Sharp shareholders gained a total return of 8.1% during the year. But that return falls short of the market. But at least that's still a gain! Over five years the TSR has been a reduction of 2% per year, over five years. It could well be that the business is stabilizing. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

We will like Sharp better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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