Natural Gas Services Group, Inc. (NYSE:NGS) shareholders should be happy to see the share price up 28% in the last quarter. But don't envy holders -- looking back over 5 years the returns have been really bad. Indeed, the share price is down 52% in the period. So we're hesitant to put much weight behind the short term increase. But it could be that the fall was overdone.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
Because Natural Gas Services Group 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last half decade, Natural Gas Services Group saw its revenue increase by 1.4% per year. That's far from impressive given all the money it is losing. This lacklustre growth has no doubt fueled the loss of 9% per year, in that time. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Natural Gas Services Group. When a stock falls hard like this, some investors like to add the company to a watchlist (in case the business recovers, longer term).
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It's nice to see that Natural Gas Services Group shareholders have received a total shareholder return of 45% over the last year. Notably the five-year annualised TSR loss of 9% per year compares very unfavourably with the recent share price performance. 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. It's always interesting to track share price performance over the longer term. But to understand Natural Gas Services Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for Natural Gas Services Group that you should be aware of before investing here.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. 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.