If you bought MRC Global (NYSE: MRC) shares a year ago, you could pocket a 75% gain today
Passive investing in index funds can generate returns that roughly match the overall market. But you can do better than that by choosing better-than-average stocks (as part of a diversified portfolio). Namely, the MRC Global inc. (NYSE: MRC) the stock price is 75% higher than it was a year ago, much better than the market return of around 46% (excluding dividends) over the same period. If he can maintain this outperformance over the long term, investors will do very well! When you zoom out, the stock is actually down 54% in the last three years.
MRC Global has not been profitable over the past twelve months, we are unlikely to see a strong correlation between its share price and its earnings per share (EPS). We can say that income is our second best option. Shareholders of unprofitable companies generally expect strong revenue growth. Indeed, rapid income growth can be easily extrapolated to expected profits, often of considerable size.
MRC Global has actually cut revenue over the past year, with a 32% reduction. The stock is up 75% during this period, a good performance given the drop in income. For us, that means there isn’t much correlation between past earnings performance and the stock price, but a closer look at analysts’ forecasts and bottom line may explain a lot.
The graph below illustrates the evolution of earnings and income over time (reveal the exact values by clicking on the image).
NYSE: MRC Profit and Revenue Growth June 28, 2021
Take a closer look at MRC Global’s financial health with this free report on its balance sheet.
A different perspective
We are pleased to report that MRC Global shareholders received a total shareholder return of 75% over one year. In particular, the loss of the annualized five-year TSR of 6% per year compares very unfavorably with the recent evolution of the share price. The long-term loss makes us cautious, but the short-term TSR gain certainly points to a brighter future. You might want to rate this data-rich visualization of its earnings, revenue, and cash flow.
Of course, you might find a fantastic investment 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 stocks currently traded on the US stock exchanges.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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