If You Had Bought CAP-XX (LON:CPX) Shares A Year Ago You'd Have Earned 218% Returns

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the CAP-XX Limited (LON:CPX) share price has soared 218% in the last year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 147% gain in the last three months. In contrast, the longer term returns are negative, since the share price is 27% lower than it was three years ago.

Check out our latest analysis for CAP-XX

Given that CAP-XX 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year CAP-XX saw its revenue grow by 12%. That's not a very high growth rate considering it doesn't make profits. In contrast, the share price took off during the year, gaining 218%. The business will need a lot more growth to justify that increase. It's quite likely that the market is considering other factors, not just revenue growth.

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

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

A Different Perspective

It's nice to see that CAP-XX shareholders have received a total shareholder return of 218% over the last year. That's better than the annualised return of 22% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Case in point: We've spotted 6 warning signs for CAP-XX you should be aware of, and 2 of them don't sit too well with us.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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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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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