Despite currently being unprofitable, Proton Motor Power Systems (LON:PPS) has delivered a 797% return to shareholders over 3 years

By
Simply Wall St
Published
August 18, 2021
AIM:PPS
Source: Shutterstock

Proton Motor Power Systems Plc (LON:PPS) shareholders might be concerned after seeing the share price drop 29% in the last quarter. But that doesn't displace its brilliant performance over three years. Indeed, the share price is up a whopping 797% in that time. As long term investors the recent fall doesn't detract all that much from the longer term story. The share price action could signify that the business itself is dramatically improved, in that time. Anyone who held for that rewarding ride would probably be keen to talk about it.

In light of the stock dropping 11% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.

Check out our latest analysis for Proton Motor Power Systems

Proton Motor Power 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Proton Motor Power Systems' revenue trended up 23% each year over three years. That's well above most pre-profit companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 108% per year, over the same period. It's always tempting to take profits after a share price gain like that, but high-growth companies like Proton Motor Power Systems can sometimes sustain strong growth for many years. So we'd recommend you take a closer look at this one, or even put it on your watchlist.

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

earnings-and-revenue-growth
AIM:PPS Earnings and Revenue Growth August 19th 2021

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While the broader market gained around 26% in the last year, Proton Motor Power Systems shareholders lost 40%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 51%, each year, over five years. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 6 warning signs we've spotted with Proton Motor Power Systems (including 3 which are significant) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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