Empresas Iansa (SNSE:IANSA) delivers shareholders strong 31% CAGR over 3 years, surging 25% in the last week alone

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. For example, the Empresas Iansa S.A. (SNSE:IANSA) share price has soared 127% in the last three years. How nice for those who held the stock! Meanwhile the share price is 25% higher than it was a week ago.

The past week has proven to be lucrative for Empresas Iansa investors, so let's see if fundamentals drove the company's three-year performance.

Check out our latest analysis for Empresas Iansa

With just US$555,383,000 worth of revenue in twelve months, we don't think the market considers Empresas Iansa to have proven its business plan. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Empresas Iansa will significantly advance the business plan before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Of course, if you time it right, high risk investments like this can really pay off, as Empresas Iansa investors might know.

Empresas Iansa had liabilities exceeding cash by US$299m when it last reported in June 2023, according to our data. That puts it in the highest risk category, according to our analysis. So the fact that the stock is up 91% per year, over 3 years shows that high risks can lead to high rewards, sometimes. It's clear more than a few people believe in the potential. You can see in the image below, how Empresas Iansa's cash levels have changed over time (click to see the values).

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

It's good to see that Empresas Iansa has rewarded shareholders with a total shareholder return of 100% in the last twelve months. That's including the dividend. That gain is better than the annual TSR over five years, which is 7%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 Empresas Iansa is showing 4 warning signs in our investment analysis , and 2 of those make us uncomfortable...

Of course Empresas Iansa may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.