It hasn't been the best quarter for Eldorado Gold Corporation (TSE:ELD) shareholders, since the share price has fallen 20% in that time. Despite this, the stock is a strong performer over the last year, no doubt about that. We're very pleased to report the share price shot up 133% in that time. So we think most shareholders won't be too upset about the recent fall. Only time will tell if there is still too much optimism currently reflected in the share price.
Eldorado Gold isn't a profitable company, so 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Eldorado Gold saw its revenue grow by 11%. That's not great considering the company is losing money. So we wouldn't have expected the share price to rise by 133%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.
You can see how revenue has changed over time in the image below.
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Eldorado Gold stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
We're pleased to report that Eldorado Gold shareholders have received a total shareholder return of 133% over one year. Notably the five-year annualised TSR loss of 23% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Eldorado Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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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