Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Optiemus Infracom Limited (NSE:OPTIEMUS) share price has soared 208% return in just a single year. Also pleasing for shareholders was the 21% gain in the last three months. Looking back further, the stock price is 195% higher than it was three years ago.
Since the stock has added ₹3.9b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Given that Optiemus Infracom 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. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
Over the last twelve months, Optiemus Infracom's revenue grew by 143%. That's well above most other pre-profit companies. Meanwhile, the market has paid attention, sending the share price soaring 208% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Optiemus Infracom's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Pleasingly, Optiemus Infracom's total shareholder return last year was 208%. That's better than the annualized TSR of 43% over the last 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 be aware of the 2 warning signs we've spotted with Optiemus Infracom .
But note: Optiemus Infracom may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.