Announcing: Magma Fincorp (NSE:MAGMA) Stock Increased An Energizing 151% In The Last Year

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right stock, you can make a lot more than 100%. For example, the Magma Fincorp Limited (NSE:MAGMA) share price has soared 151% return in just a single year. Better yet, the 183% gain over the last thirty days has shareholders excited. We note that Magma Fincorp reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report. Zooming out, the stock is actually down 23% in the last three years.

See our latest analysis for Magma Fincorp

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the last year, Magma Fincorp actually saw its earnings per share drop 64%.

So we don't think that investors are paying too much attention to EPS. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.

Magma Fincorp's revenue actually dropped 5.7% over last year. So using a snapshot of key business metrics doesn't give us a good picture of why the market is bidding up the stock.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that Magma Fincorp shareholders have received a total shareholder return of 151% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 9% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Magma Fincorp better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Magma Fincorp you should be aware of, and 1 of them is potentially serious.

Of course Magma Fincorp 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 IN 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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