When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Ensign Energy Services Inc. (TSE:ESI) share price has soared 124% in the last 1 year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 80% over the last quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. In contrast, the longer term returns are negative, since the share price is 46% lower than it was three years ago.
The past week has proven to be lucrative for Ensign Energy Services investors, so let's see if fundamentals drove the company's one-year performance.
Given that Ensign Energy Services didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Ensign Energy Services grew its revenue by 6.3% last year. That's not a very high growth rate considering it doesn't make profits. So we wouldn't have expected the share price to rise by 124%. The business will need a lot more growth to justify that increase. It's quite likely that the market is considering other factors, not just revenue growth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Ensign Energy Services' financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Ensign Energy Services shareholders have received a total shareholder return of 124% over the last year. Notably the five-year annualised TSR loss of 6% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. For instance, we've identified 1 warning sign for Ensign Energy Services that you should be aware of.
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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.