Did You Miss Locaweb Serviços de Internet's (BVMF:LWSA3) Whopping 473% Share Price Gain?

For many, the main point of investing in the stock market is to achieve spectacular returns. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. For example, the Locaweb Serviços de Internet S.A. (BVMF:LWSA3) share price is up a whopping 473% in the last year, a handsome return in a single year. On top of that, the share price is up 77% in about a quarter. Locaweb Serviços de Internet hasn't been listed for long, so it's still not clear if it is a long term winner.

Check out our latest analysis for Locaweb Serviços de Internet

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the last twelve months, Locaweb Serviços de Internet actually shrank its EPS by 16%.

So we don't think that investors are paying too much attention to EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

We are skeptical of the suggestion that the 0.05% dividend yield would entice buyers to the stock. We think that the revenue growth of 23% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.

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

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Locaweb Serviços de Internet shareholders should be happy with the total gain of 474% over the last twelve months, including dividends. That's better than the more recent three month gain of 77%, implying that share price has plateaued recently. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Locaweb Serviços de Internet you should know about.

We will like Locaweb Serviços de Internet 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 BR 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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