Is Optiemus Infracom's (NSE:OPTIEMUS) Share Price Gain Of 127% Well Earned?

When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Optiemus Infracom Limited (NSE:OPTIEMUS) share price had more than doubled in just one year - up 127%. It's up an even more impressive 207% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. Having said that, the longer term returns aren't so impressive, with stock gaining just 28% in three years.

Check out our latest analysis for Optiemus Infracom

Optiemus Infracom 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.

Optiemus Infracom actually shrunk its revenue over the last year, with a reduction of 70%. We're a little surprised to see the share price pop 127% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

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

A Different Perspective

We're pleased to report that Optiemus Infracom rewarded shareholders with a total shareholder return of 127% over the last year. That gain actually surpasses the 9% TSR it generated (per year) over three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we've spotted with Optiemus Infracom (including 1 which is is concerning) .

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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