B. Yair Building Corporation 1988 (TLV:BYAR) offers shareholders a notable 5-year CAGR of 14%, up 17% in the last week alone

It is undoubtedly positive to see that the B.Yair Building Corporation 1988 Ltd (TLV:BYAR) The stock price has gained about 87% over the past three months. But that doesn’t change the fact that returns over the past five years have been less than pleasing. You would have done a lot better buying an index fund, since the stock has fallen 60% over that half-decade.

On a more encouraging note, the company has added €15m to its market capitalization in the last 7 days alone, so let’s see if we can work out what drove the five-year loss for shareholders.

Check out our latest review for B. Yair Building Corporation 1988

B. Yair Building Corporation 1988 only recorded ₪2,494,000 in revenue in the last twelve months, which is not really enough for us to consider it a proven product. We can’t help but wonder why it’s listed on the stock exchange so early in its journey. Aren’t venture capitalists interested? As a result, we think shareholders are unlikely to pay much attention to current earnings, but instead speculate on growth in the years to come. It seems likely that some shareholders believe that B. Yair Building Corporation 1988 will significantly advance the business plan before too long.

Businesses that lack both significant revenue and profit are generally considered high risk. You should be aware that there is always the possibility that this type of company may need to issue more shares to raise funds to pursue its business plan. While some of these companies do very well in the long run, others are hyped by promoters before eventually falling back to earth and going bankrupt (or being recapitalized). B. Yair Building Corporation 1988 has already given some investors a taste of the bitter losses that high-risk investments can bring.

When its balance sheet was last released in June 2021, B. Yair Building Corporation 1988 could boast of a strong position, with cash exceeding all liabilities by ₪35 million. This allows management to focus on growing the business and not worry too much about raising capital. But since the stock price has fallen 10% per year, over 5 years, it seems that the market was overexcited before. You can click on the image below to see (in more detail) how B. Yair Building Corporation 1988 cash levels have changed over time.

TASE: BYAR Debt to Equity History March 16, 2022

In reality, it is difficult to have much certainty when valuing a business that has no revenues or profits. What if insiders dumped stock by the shovel? I would love that as much as I love drinking milk and mixed fruit juice. You can click here to see if there are any insiders selling.

What about dividends?

In addition to measuring share price performance, investors should also consider total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital increases, as well as any dividends, based on the assumption that dividends are reinvested. It’s fair to say that the TSR gives a more complete picture of stocks that pay a dividend. In the case of B. Yair Building Corporation 1988, it has a TSR of 92% for the past 5 years. This exceeds the performance of its share price that we mentioned earlier. And there’s no price guessing that dividend payouts largely explain the divergence!

A different perspective

It is good to see that B. Yair Building Corporation 1988 has rewarded its shareholders with a total shareholder return of 72% over the past twelve months. And that includes the dividend. That’s better than the 14% annualized return over half a decade, which implies the company has been doing better recently. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Take risks, for example – B. Yair Building Corporation 1988 a 6 warning signs (and 2 that are concerning) that we think you should know about.

Sure B. Yair Building Corporation 1988 may not be the best stock to buy. So you might want to see this free collection of growth values.

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

Luisa D. Fuller