Madison Square Garden Sports (NYSE: MSGS) shareholders are up 4.5% last week, but still in the red for the past three years

In order to justify the effort of selecting individual stocks, it is worth striving to beat the returns of a market index fund. But in any portfolio, it is likely that some stocks will be below this benchmark. We regret to report that in the long term Madison Square Garden Sports Corp. Shareholders (NYSE: MSGS) had this experience, with the stock price falling 46% in three years, compared to a market return of around 61%. Shareholders have had an even tougher time lately, with the stock price falling 16% in the past 90 days. This could be related to recent financial results – you can find out about the most recent data by reading our company report.

As the stock rose 4.5% last week but long-term shareholders are still in the red, let’s see what the fundamentals can tell us.

Check out our latest analysis for Madison Square Garden Sports

Madison Square Garden Sports is currently unprofitable, so most analysts would look to revenue growth to get a sense of how fast the underlying business is growing. Shareholders of unprofitable companies generally expect strong revenue growth. Indeed, the rapid growth in income can be easily extrapolated to the expected profits, often of considerable size.

Over the past three years, Madison Square Garden Sports’ revenue has fallen 53% annually. This means that its income trend is very low compared to other loss making companies. With declining sales, the drop in the share price of 13% per year is hardly unjustified. It would probably be worth considering whether the business can fund itself to profitability. The company will need to get back to revenue growth as quickly as possible if it is to see any enthusiasm from investors.

The graph below illustrates the evolution of earnings and income over time (reveal the exact values ​​by clicking on the image).

profit and revenue growth

The strength of the balance sheet is crucial. It might be worth taking a look at our free report on changes in their financial situation over time.

What about the Total Shareholder Return (TSR)?

We have already covered the development of Madison Square Garden Sports’ share price, but we should also mention its total shareholder return (TSR). TSR is a yield calculation that takes into account the value of cash dividends (assuming any dividends received have been reinvested) and the calculated value of any discounted capital increase and spinoff. Note that the TSR of Madison Square Garden Sports, at -24%, is higher than the return on its share price by -46%. When you consider that he did not pay a dividend, this data suggests that the shareholders benefited from a spin-off or had the possibility of acquiring shares at an attractive price during a capital increase at reduced price.

A different perspective

Madison Square Garden Sports shareholders achieved a total return of 1.4% during the year. Unfortunately, this does not match the performance of the market. This is probably a good sign that the company has an even better long-term performance history, having provided shareholders with an annual TSR of 5% over five years. It is entirely possible that the company will continue to perform well, even if the stock price gains slow. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really get an overview, we have to take other information into account as well. Consider, for example, the ever-present specter of investment risk. We have identified 1 warning sign with Madison Square Garden Sports, and understanding them should be part of your investment process.

If you are like me then you not want to miss it free list of growing companies that insiders buy.

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

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

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