Those who invested in FAT Brands (NASDAQ:FAT) three years ago are up 267%

·3-min read

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. For example, the FAT Brands Inc. (NASDAQ:FAT) share price has soared 239% in the last three years. That sort of return is as solid as granite. Also pleasing for shareholders was the 44% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

Check out our latest analysis for FAT Brands

Because FAT Brands 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

FAT Brands' revenue trended up 103% each year over three years. That's much better than most loss-making companies. Meanwhile, the share price performance has been pretty solid at 50% compound over three years. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say FAT Brands is still worth investigating - successful businesses can often keep growing for long periods.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

Take a more thorough look at FAT Brands' financial health with this free report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of FAT Brands, it has a TSR of 267% for the last 3 years. That exceeds its share price return that we previously mentioned. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

It's nice to see that FAT Brands shareholders have gained 0.6% (in total) over the last year. And yes, that does include the dividend. But the three year TSR of 54% per year is even better. It's always interesting to track share price performance over the longer term. But to understand FAT Brands better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for FAT Brands you should be aware of, and 3 of them are a bit concerning.

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.

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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