If You Had Bought Legend Power Systems (CVE:LPS) Stock A Year Ago, You Could Pocket A 241% Gain Today

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Legend Power Systems Inc. (CVE:LPS) share price had more than doubled in just one year - up 241%. In more good news, the share price has risen 26% in thirty days. Unfortunately the longer term returns are not so good, with the stock falling 28% in the last three years.

Check out our latest analysis for Legend Power Systems

Because Legend Power Systems made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year Legend Power Systems saw its revenue shrink by 31%. We're a little surprised to see the share price pop 241% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

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

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 Legend Power Systems' earnings, revenue and cash flow.

A Different Perspective

It's good to see that Legend Power Systems has rewarded shareholders with a total shareholder return of 241% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 25% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Legend Power Systems better, we need to consider many other factors. For instance, we've identified 5 warning signs for Legend Power Systems (2 can't be ignored) that you should be aware of.

Legend Power Systems is not the only stock that insiders are buying. 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.

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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. 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.
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