Shareholders have faith in loss-making Argo Blockchain (LON:ARB) as stock climbs 22% in past week, taking five-year gain to 420% – Simply Wall St

Shareholders have faith in loss-making Argo Blockchain (LON:ARB) as stock climbs 22% in past week, taking five-year gain to 420% – Simply Wall St

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Argo Blockchain plc (LON:ARB) shareholders might be rather concerned because the share price has dropped 35% in the last month. But that doesn’t undermine the fantastic longer term performance (measured over five years). Indeed, the share price is up a whopping 420% in that time. Arguably, the recent fall is to be expected after such a strong rise. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 81% decline over the last three years: that’s a long time to wait for profits.

Since the stock has added UK£17m to its market cap in the past week alone, let’s see if underlying performance has been driving long-term returns.

Check out our latest analysis for Argo Blockchain

Because Argo Blockchain made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Argo Blockchain can boast revenue growth at a rate of 36% per year. That’s well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 39% per year in that time. It’s never too late to start following a top notch stock like Argo Blockchain, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
LSE:ARB Earnings and Revenue Growth January 27th 2024

This free interactive report on Argo Blockchain’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It’s good to see that Argo Blockchain has rewarded shareholders with a total shareholder return of 11% in the last twelve months. However, that falls short of the 39% TSR per annum it has made for shareholders, each year, over five years. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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 4 warning signs for Argo Blockchain (2 can’t be ignored) that you should be aware of.

But note: Argo Blockchain may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges.

Valuation is complex, but we’re helping make it simple.

Find out whether Argo Blockchain is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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

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.

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