It's been a soft week for Tata Teleservices (Maharashtra) Limited (NSE:TTML) shares, which are down 14%. But over the last year the share price has taken off like one of Elon Musk's rockets. In fact, it is up 994% in that time. So we wouldn't blame sellers for taking some profits. Only time will tell if there is still too much optimism currently reflected in the share price.
We love happy stories like this one. The company should be really proud of that performance!
Because Tata Teleservices (Maharashtra) made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Tata Teleservices (Maharashtra) actually shrunk its revenue over the last year, with a reduction of 3.2%. So it's very confusing to see that the share price gained a whopping 994%. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. To us, a gain like this looks like speculation, but there might be historical trends to back it up.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Tata Teleservices (Maharashtra)'s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We're pleased to report that Tata Teleservices (Maharashtra) shareholders have received a total shareholder return of 994% over one year. That gain is better than the annual TSR over five years, which is 41%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Tata Teleservices (Maharashtra) (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
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