The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. For example, the Ramco Systems Limited (NSE:RAMCOSYS) share price has soared 146% in the last three years. That sort of return is as solid as granite. On top of that, the share price is up 41% in about a quarter.
The past week has proven to be lucrative for Ramco Systems investors, so let's see if fundamentals drove the company's three-year performance.
Given that Ramco Systems only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over the last three years Ramco Systems has grown its revenue at 8.9% annually. That's pretty nice growth. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 35% per year over three years. The business has made good progress on the top line, but the market is extrapolating the growth. Some investors like to buy in just after a company becomes profitable, since that can be a powerful inflexion point.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free report showing analyst forecasts should help you form a view on Ramco Systems
A Different Perspective
We're pleased to report that Ramco Systems shareholders have received a total shareholder return of 34% over one year. That gain is better than the annual TSR over five years, which is 2%. Therefore it seems like sentiment around the company has been positive lately. 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 Ramco Systems better, we need to consider many other factors. Take risks, for example - Ramco Systems has 2 warning signs we think you should be aware of.
Of course Ramco Systems 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 Indian exchanges.
Valuation is complex, but we're here to simplify it.
Discover if Ramco Systems might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.