Does TeraGo's (TSE:TGO) Share Price Gain of 44% Match Its Business Performance?

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, the TeraGo Inc. (TSE:TGO) share price is up 44% in the last five years, slightly above the market return. In comparison, the share price is down 11% in a year.

View our latest analysis for TeraGo

Given that TeraGo didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years TeraGo saw its revenue shrink by 5.6% per year. Even though revenue hasn't increased, the stock actually gained 8%, per year, during the same period. It's probably worth checking other factors such as the profitability, to try to understand the share price action. It may not be reflecting the revenue.

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

Take a more thorough look at TeraGo's financial health with this free report on its balance sheet.

A Different Perspective

Investors in TeraGo had a tough year, with a total loss of 11%, against a market gain of about 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 8% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand TeraGo better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for TeraGo you should be aware of.

We will like TeraGo better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, 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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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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