If You Had Bought SQI Diagnostics (CVE:SQD) Stock A Year Ago, You Could Pocket A 246% Gain Today

It hasn't been the best quarter for SQI Diagnostics Inc. (CVE:SQD) shareholders, since the share price has fallen 13% in that time. But that doesn't change the fact that the returns over the last year have been very strong. During that period, the share price soared a full 246%. So it may be that the share price is simply cooling off after a strong rise. The real question is whether the business is trending in the right direction.

View our latest analysis for SQI Diagnostics

SQI Diagnostics wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

SQI Diagnostics actually shrunk its revenue over the last year, with a reduction of 22%. We're a little surprised to see the share price pop 246% in the last year. It just goes to show the market doesn't always pay attention to the reported numbers. It's quite likely the revenue fall was already priced in, anyway.

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

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of SQI Diagnostics' earnings, revenue and cash flow.

A Different Perspective

It's good to see that SQI Diagnostics has rewarded shareholders with a total shareholder return of 246% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 6% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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 for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with SQI Diagnostics (at least 2 which are significant) , and understanding them should be part of your investment process.

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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