Genetic Signatures (ASX:GSS) hikes 16% this week, taking five-year gains to 222%

By
Simply Wall St
Published
December 22, 2021
ASX:GSS
Source: Shutterstock

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Genetic Signatures Limited (ASX:GSS) share price has soared 222% in the last half decade. Most would be very happy with that. And in the last week the share price has popped 16%.

Since it's been a strong week for Genetic Signatures shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Genetic Signatures

While Genetic Signatures made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

For the last half decade, Genetic Signatures can boast revenue growth at a rate of 48% per year. Even measured against other revenue-focussed companies, that's a good result. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 26% per year, compound, during the period. So it seems likely that buyers have paid attention to the strong revenue growth. To our minds that makes Genetic Signatures worth investigating - it may have its best days ahead.

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:GSS Earnings and Revenue Growth December 22nd 2021

It is of course excellent to see how Genetic Signatures has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

While the broader market gained around 16% in the last year, Genetic Signatures shareholders lost 28%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 26%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Genetic Signatures better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Genetic Signatures .

Of course Genetic Signatures may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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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