Five-Year-Return

A typical data point many review before investing is the return of an equity. Of course you look as far back as you would like, but typically there is the year to date, one year, three year, and five year, which is what we will be talking about in this article.

Updated over a year ago
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Reviewed by Vlad Skutelnik

Utilizing the five year return allows you to see many different aspects the shorter term returns may omit. Business tendencies during different parts of the year may be picked up over a five year return. Also, you can take a look at different macro events such as the location of the business cycle as a whole.


Watch out for price decline

Please consider monitoring Voxeljet on a daily basis if you are holding a position in it. Voxeljet is trading at a penny-stock level, and the possibility of delisting is much higher compared to other delisted stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Voxeljet stock to be traded above the $1 level to remain listed. If Voxeljet stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Voxeljet's Liquidity

Voxeljet financial leverage refers to using borrowed capital as a funding source to finance Voxeljet Ag ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Voxeljet financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Voxeljet's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Voxeljet's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Voxeljet's total debt and its cash.

If you are a day trader or short term trader, then the five year return approach may not fit your profile because you are looking more closely at the here and now, rather than what happened five years prior. For people who are looking to buy and hold, the five year return might be up your ally.

When looking at returns, it is important to narrow in on specifics because the five year return may not fit for every equity. If you are looking at a target date mutual fund, odds are the five year return will be steadily increasing due to its agenda. It is different too if you are looking at an ETF that tracks the broader market, which may not warrant a look at the five year return because the overall market tends to increase, even after difficult economic events such as 2008 and the great depression.

You can also utilize the five year return to look at where the stock has been compared to where you believe the stock can go, giving you a potential price target. Price targets do not have a set formula to use, but looking at historical events can certainly give you an insight to how a company may react if it were to happen again.

When looking into the past, you do not want to become romantic and lose sight of the future, because the company and yourself need to be forward looking. History is great to learn from and understand how a company or equity may react, but don’t let the hinder your ability to predict the future with as much accuracy as you can. Find the right return history for your current investing and trading profile and include it with your research. I would compare it to salt in a dish, enough makes everything pop, but too much can ruin what you already have.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Voxeljet Ag. Please refer to our Terms of Use for any information regarding our disclosure principles.

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