Stock Analysis

The Calix (ASX:CXL) Share Price Is Up 87% And Shareholders Are Holding On

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ASX:CXL
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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). To wit, the Calix Limited (ASX:CXL) share price is 87% higher than it was a year ago, much better than the market return of around 0.4% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Calix hasn't been listed for long, so it's still not clear if it is a long term winner.

View our latest analysis for Calix

Calix isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year Calix saw its revenue grow by 325%. That's well above most other pre-profit companies. While the share price gain of 87% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Calix. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
ASX:CXL Earnings and Revenue Growth February 18th 2021

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

Calix shareholders should be happy with the total gain of 87% over the last twelve months. And the share price momentum remains respectable, with a gain of 70% in the last three months. This suggests the company is continuing to win over new investors. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Calix .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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Valuation is complex, but we're helping make it simple.

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