Is IDT Australia's (ASX:IDT) 280% Share Price Increase Well Justified?

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the IDT Australia Limited (ASX:IDT) share price has flown 280% in the last three years. How nice for those who held the stock! It's even up 63% in the last week.

Check out our latest analysis for IDT Australia

We don't think that IDT Australia's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. 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.

IDT Australia's revenue trended up 3.5% each year over three years. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In contrast, the stock has popped 56% per year in that time - an impressive result. We'd need to take a closer look at the revenue and profit trends to see whether the improvements might justify that sort of increase. It seems likely that the market is pretty optimistic about IDT Australia, given it is losing money.

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

Take a more thorough look at IDT Australia's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that IDT Australia shareholders have received a total shareholder return of 185% over the last year. That's better than the annualised return of 0.4% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand IDT Australia better, we need to consider many other factors. For instance, we've identified 2 warning signs for IDT Australia that you should be aware of.

Of course IDT Australia 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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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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