If You Had Bought Buru Energy (ASX:BRU) Shares A Year Ago You'd Have Earned 89% Returns

Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Buru Energy Limited (ASX:BRU) share price is up 89% in the last year, clearly besting the market return of around 50% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 52% in the last three years.

Check out our latest analysis for Buru Energy

Because Buru Energy 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.

Buru Energy actually shrunk its revenue over the last year, with a reduction of 18%. Despite the lack of revenue growth, the stock has returned a solid 89% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Buru Energy's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Buru Energy has rewarded shareholders with a total shareholder return of 89% in the last twelve months. That certainly beats the loss of about 6% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. For example, we've discovered 2 warning signs for Buru Energy that you should be aware of before investing here.

We will like Buru Energy better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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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