Can You Imagine How Jubilant Cogstate's (ASX:CGS) Shareholders Feel About Its 214% Share Price Gain?

Cogstate Limited (ASX:CGS) shareholders have seen the share price descend 22% over the month. On the other hand, over the last twelve months the stock has delivered rather impressive returns. We're very pleased to report the share price shot up 214% in that time. So it may be that the share price is simply cooling off after a strong rise. More important, going forward, is how the business itself is going.

See our latest analysis for Cogstate

Cogstate 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Cogstate saw its revenue grow by 8.5%. That's not a very high growth rate considering it doesn't make profits. In contrast, the share price took off during the year, gaining 214%. The business will need a lot more growth to justify that increase. It's quite likely that the market is considering other factors, not just revenue growth.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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

A Different Perspective

We're pleased to report that Cogstate shareholders have received a total shareholder return of 214% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 20% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Case in point: We've spotted 2 warning signs for Cogstate you should be aware of, and 1 of them is a bit concerning.

We will like Cogstate 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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