Stock Analysis

Sierra Wireless (TSE:SW) Shareholders Have Enjoyed A 99% Share Price Gain

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TSX:SW
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The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the Sierra Wireless, Inc. (TSE:SW) share price is 99% higher than it was a year ago, much better than the market return of around 3.9% (not including dividends) in the same period. So that should have shareholders smiling. The longer term returns have not been as good, with the stock price only 17% higher than it was three years ago.

View our latest analysis for Sierra Wireless

Sierra Wireless isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

In the last year Sierra Wireless saw its revenue shrink by 0.8%. The stock is up 99% in that time, a fine performance given the revenue drop. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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TSX:SW Earnings and Revenue Growth February 15th 2021

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for Sierra Wireless in this interactive graph of future profit estimates.

A Different Perspective

It's nice to see that Sierra Wireless shareholders have received a total shareholder return of 99% over the last year. That's better than the annualised return of 8% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Sierra Wireless is showing 3 warning signs in our investment analysis , you should know about...

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are 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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