Despite an 8.8 million CAD drop last week, ATA Creativity Global (NASDAQ:AACG) shareholders are still up 330% over 5 years

ATA Creativity Global (NASDAQ:AACG) Shareholders will no doubt be very grateful to see the stock price rise 115% in the last quarter.

After losing 11% last week, it’s worth looking at company fundamentals to see what we can infer from past performance.

However, if you prefer to see where opportunities and risks are within the AACG industryyou can consult our analysis of the US consumer services sector.

ATA Creativity Global has not been profitable for the last twelve months, we are unlikely to see a strong correlation between its share price and earnings per share (EPS). Income is arguably our second best option. Generally speaking, companies without profits should increase their revenue every year, and at a good pace. Indeed, rapid revenue growth can be easily extrapolated to predict profits, often of considerable size.

Over the past five years, ATA Creativity Global has seen its revenue decline by 9.1% per year. This is certainly a lower result than what most nonprofits report. Arguably, the market reacted appropriately to this trading performance by driving the stock price down 9% (annualized) over the same period. We generally don’t like owning businesses that are losing money and not growing revenue. You might be better off spending your money on a leisure activity. You would want to research this company thoroughly before buying, it seems a bit too risky to us.

You can see how earnings and income have changed over time in the image below (click on the graph to see exact values).

NasdaqGM: AACG Earnings and Revenue Growth September 3, 2022

If you are considering buying or selling ATA Creativity Global shares, you should check out this FREE detailed report on its balance sheet.

What about total shareholder return (TSR)?

Investors should note that there is a difference between ATA Creativity Global’s total shareholder return (TSR) and its share price change, which we’ve covered above. TSR is a calculation of return that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of all discounted capital raisings and spinoffs. ATA Creativity Global’s TSR of 330% for 5 years outperformed its share price return as it paid dividends.

A different perspective

While the broader market lost around 18% in the twelve months, ATA Creativity Global shareholders fared even worse, losing 21%. However, it could simply be that the stock price was impacted by greater market jitters. It might be worth keeping an eye on the fundamentals, in case there is a good opportunity. On the positive side, long-term shareholders have made money, with a gain of 34% per year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. It is always interesting to follow the evolution of the share price over the long term. But to better understand ATA Creativity Global, we need to consider many other factors. Like risks, for example. Every business has them, and we’ve spotted 2 warning signs for ATA Creativity Global (1 of which can’t be ignored!) that you should know about.

If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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