Stock Analysis

If You Had Bought Draganfly (CSE:DFLY) Shares A Year Ago You'd Have Earned 31% Returns

CNSX:DPRO
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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 Draganfly Inc. (CSE:DFLY) share price is 31% higher than it was a year ago, much better than the market return of around 1.1% (not including dividends) in the same period. That's a solid performance by our standards! Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.

Check out our latest analysis for Draganfly

Because Draganfly made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 Draganfly saw its revenue grow by 189%. That's well above most other pre-profit companies. While the share price gain of 31% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. So quite frankly it could be a good time to investigate Draganfly in some detail. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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CNSX:DFLY Earnings and Revenue Growth January 2nd 2021

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Draganfly's earnings, revenue and cash flow.

A Different Perspective

Draganfly shareholders should be happy with the total gain of 31% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 31% in that time. This suggests the company is continuing to win over new investors. It's always interesting to track share price performance over the longer term. But to understand Draganfly better, we need to consider many other factors. Even so, be aware that Draganfly is showing 5 warning signs in our investment analysis , and 1 of those is concerning...

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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

Find out whether Draganfly is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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