Long term investing can be life changing when you buy and hold the truly great businesses. And highest quality companies can see their share prices grow by huge amounts. Just think about the savvy investors who held Endeavour Mining Corporation (TSE:EDV) shares for the last five years, while they gained 518%. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 11% in about a quarter. But this could be related to the strong market, which is up 12% in the last three months.
It really delights us to see such great share price performance for investors.
Endeavour Mining wasn’t profitable in the last twelve months, it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last 5 years Endeavour Mining saw its revenue grow at 14% per year. That’s a fairly respectable growth rate. Arguably it’s more than reflected in the very strong share price gain of 44% a year over a half a decade. It might not be cheap but a (long-term) growth stock like this is usually well worth taking a closer look at.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Endeavour Mining stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
It’s nice to see that Endeavour Mining shareholders have received a total shareholder return of 34% over the last year. However, that falls short of the 44% TSR per annum it has made for shareholders, each year, over five years. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example – Endeavour Mining has 2 warning signs we think you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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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. 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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