This week we saw the BrightSpire Capital, Inc. (NYSE:BRSP) share price climb by 17%. But that doesn't change the fact that the returns over the last five years have been less than pleasing. In fact, the share price is down 56%, which falls well short of the return you could get by buying an index fund.
The recent uptick of 17% could be a positive sign of things to come, so let's take a look at historical fundamentals.
Given that BrightSpire Capital 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.
In the last five years BrightSpire Capital saw its revenue shrink by 6.9% per year. While far from catastrophic that is not good. The share price decline of 9% compound, over five years, is understandable given the company is losing money, and revenue is moving in the wrong direction. The chance of imminent investor enthusiasm for this stock seems slimmer than Louise Brooks. Ultimately, it may be worth watching - should revenue pick up, the share price might follow.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on BrightSpire Capital's balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for BrightSpire Capital the TSR over the last 5 years was -33%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
BrightSpire Capital provided a TSR of 20% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 6% per year, over five years. It could well be that the business is stabilizing. 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. For instance, we've identified 1 warning sign for BrightSpire Capital that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.
