The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) share price is 86% higher than it was a year ago, much better than the market return of around 26% (not including dividends) in the same period. So that should have shareholders smiling. It is also impressive that the stock is up 50% over three years, adding to the sense that it is a real winner.
Since the long term performance has been good but there's been a recent pullback of 5.2%, let's check if the fundamentals match the share price.
While Compañía de Minas BuenaventuraA made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last year Compañía de Minas BuenaventuraA saw its revenue shrink by 0.1%. Despite the lack of revenue growth, the stock has returned a solid 86% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling Compañía de Minas BuenaventuraA stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Compañía de Minas BuenaventuraA shareholders have received a total shareholder return of 88% over the last year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 2% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Compañía de Minas BuenaventuraA is showing 2 warning signs in our investment analysis , you should know about...
Of course Compañía de Minas BuenaventuraA may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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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.