We believe investing is smart because history shows that stock markets go higher in the long term. But not every stock you buy will perform as well as the overall market. Unfortunately for shareholders, while the Clipper Realty Inc. (NYSE:CLPR) share price is up 47% in the last year, that falls short of the market return. However, the longer term returns haven’t been so impressive, with the stock up just 0.6% in the last three years.
See our latest analysis for Clipper Realty
Given that Clipper Realty 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last twelve months, Clipper Realty’s revenue grew by 5.7%. That’s not a very high growth rate considering it doesn’t make profits. It’s probably fair to say that the modest growth is reflected in the modest share price gain of 47%. It might be worth thinking about how long it will take the company to turn a profit.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
NYSE:CLPR Earnings and Revenue Growth April 29th 2021
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts
What About Dividends?
As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Clipper Realty the TSR over the last year was 55%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Clipper Realty shareholders have gained 55% over twelve months (even including dividends). This isn’t far from the market return of 52%. Most would be happy with a gain, and it helps that the year’s return is actually better than the average return of 5% over the last three years, implying that the company is doing better recently. It’s good to see the uptick, although the business fundamentals will need to move in the right direction if the company is to sustain the rise. 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. Take risks, for example – Clipper Realty has 1 warning sign we think you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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. 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.
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