Volatility 101: Should Gatekeeper Systems Shares Have Dropped 45%?

Gatekeeper Systems Inc. (CVE:GSI) shareholders should be happy to see the share price up 22% in the last month. But over the last half decade, the stock has not performed well. After all, the share price is down 45% in that time, significantly under-performing the market.

View our latest analysis for Gatekeeper Systems

Gatekeeper Systems 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 it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last half decade, Gatekeeper Systems saw its revenue increase by 16% per year. That’s well above most other pre-profit companies. The share price drop of 11% per year over five years would be considered let down. So you might argue the Gatekeeper Systems should get more credit for its rather impressive revenue growth over the period. If that’s the case, now might be the smart time to take a close look at it.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

TSXV:GSI Income Statement, March 6th 2019
TSXV:GSI Income Statement, March 6th 2019

This free interactive report on Gatekeeper Systems’s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

While the broader market gained around 4.2% in the last year, Gatekeeper Systems shareholders lost 4.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, longer term shareholders are suffering worse, given the loss of 11% doled out over the last five years. We’d need to see some sustained improvements in the key metrics before we could muster much enthusiasm. Before spending more time on Gatekeeper Systems it might be wise to click here to see if insiders have been buying or selling shares.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.