One simple way to benefit from the stock market is to buy an index fund. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, GetSwift Limited (ASX:GSW) shareholders have seen the share price rise 75% over three years, well in excess of the market return (20%, not including dividends). However, more recent returns haven’t been as impressive as that, with the stock returning just 19% in the last year.
GetSwift isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over the last three years GetSwift has grown its revenue at 80% annually. That’s well above most pre-profit companies. While the compound gain of 21% per year over three years is pretty good, you might argue it doesn’t fully reflect the strong revenue growth. So now might be the perfect time to put GetSwift on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
GetSwift produced a TSR of 19% over the last year. While you don’t go broke making a profit, this return was actually lower than the average market return of about 24%. But the (superior) three-year TSR of 21% per year is some consolation. Even the best companies don’t see strong share price performance every year. It’s always interesting to track share price performance over the longer term. But to understand GetSwift better, we need to consider many other factors. For example, we’ve discovered 6 warning signs for GetSwift (1 can’t be ignored!) that you should be aware of before investing here.
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 AU exchanges.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.