When you buy shares in a company, there is always a risk that the price drops to zero. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Vascon Engineers Limited (NSE:VASCONEQ) share price has soared 123% in the last 1 year. Most would be very happy with that, especially in just one year! And in the last month, the share price has gained 28%. And shareholders have also done well over the long term, with an increase of 83% in the last three years.
The past week has proven to be lucrative for Vascon Engineers investors, so let's see if fundamentals drove the company's one-year performance.
While Vascon Engineers made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last year Vascon Engineers saw its revenue grow by 41%. We respect that sort of growth, no doubt. The revenue growth is decent but the share price had an even better year, gaining 123%. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
This free interactive report on Vascon Engineers' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Vascon Engineers shareholders have received a total shareholder return of 123% over the last year. Notably the five-year annualised TSR loss of 0.2% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Vascon Engineers better, we need to consider many other factors. Take risks, for example - Vascon Engineers has 4 warning signs we think you should be aware of.
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 IN exchanges.
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.