...

The past five years for SKY Network Television (NZSE:SKT) investors has not been profitable




  • In Business
  • 2021-09-26 21:33:45Z
  • By Simply Wall St.
 

SKY Network Television Limited (NZSE:SKT) shareholders should be happy to see the share price up 23% in the last month. But will that repair the damage for the weary investors who have owned this stock as it declined over half a decade? Probably not. Indeed, the share price is down a whopping 96% in that time. While the recent increase might be a green shoot, we're certainly hesitant to rejoice. The million dollar question is whether the company can justify a long term recovery. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

View our latest analysis for SKY Network Television

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During five years of share price growth, SKY Network Television moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.

Arguably, the revenue drop of 5.7% a year for half a decade suggests that the company can't grow in the long term. That could explain the weak share price.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So it makes a lot of sense to check out what analysts think SKY Network Television will earn in the future (free profit forecasts).

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between SKY Network Television's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for SKY Network Television shareholders, and that cash payout explains why its total shareholder loss of 82%, over the last 5 years, isn't as bad as the share price return.

A Different Perspective

It's nice to see that SKY Network Television shareholders have received a total shareholder return of 39% over the last year. There's no doubt those recent returns are much better than the TSR loss of 13% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand SKY Network Television better, we need to consider many other factors. Take risks, for example - SKY Network Television 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 NZ exchanges.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

COMMENTS

More Related News

CSR (ASX:CSR) shareholders notch a 27% CAGR over 3 years, yet earnings have been shrinking
CSR (ASX:CSR) shareholders notch a 27% CAGR over 3 years, yet earnings have been shrinking

One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks...

Universal (NYSE:UVV) shareholders have endured a 15% loss from investing in the stock three years ago
Universal (NYSE:UVV) shareholders have endured a 15% loss from investing in the stock three years ago

Many investors define successful investing as beating the market average over the long term. But in any portfolio...

Millicom International Cellular (NASDAQ:TIGO) shareholders have endured a 28% loss from investing in the stock three years ago
Millicom International Cellular (NASDAQ:TIGO) shareholders have endured a 28% loss from investing in the stock three years ago

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market...

Those who invested in Morgan Advanced Materials (LON:MGAM) a year ago are up 36%
Those who invested in Morgan Advanced Materials (LON:MGAM) a year ago are up 36%

Morgan Advanced Materials plc ( LON:MGAM ) shareholders have seen the share price descend 11% over the month. But that...

Is There Now An Opportunity In Clinigen Group plc (LON:CLIN)?
Is There Now An Opportunity In Clinigen Group plc (LON:CLIN)?

Clinigen Group plc ( LON:CLIN ), might not be a large cap stock, but it saw a double-digit share price rise of over 10...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business