Did Business Growth Power ElringKlinger's (ETR:ZIL2) Share Price Gain of 176%?

ElringKlinger AG (ETR:ZIL2) shareholders might be concerned after seeing the share price drop 13% in the last month. But that doesn't detract from the splendid returns of the last year. Indeed, the share price is up an impressive 176% in that time. So it may be that the share price is simply cooling off after a strong rise. More important, going forward, is how the business itself is going.

View our latest analysis for ElringKlinger

ElringKlinger 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 year ElringKlinger saw its revenue shrink by 17%. So we would not have expected the share price to rise 176%. 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.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling ElringKlinger stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that ElringKlinger shareholders have received a total shareholder return of 176% over the last year. That certainly beats the loss of about 6% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. Case in point: We've spotted 1 warning sign for ElringKlinger you should be aware of.

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 DE 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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