Is Jaiprakash Power Ventures' (NSE:JPPOWER) Share Price Gain Of 179% Well Earned?

By
Simply Wall St
Published
December 13, 2020
NSEI:JPPOWER

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Jaiprakash Power Ventures Limited (NSE:JPPOWER) share price had more than doubled in just one year - up 179%. It's also up 70% in about a month. On the other hand, longer term shareholders have had a tougher run, with the stock falling 42% in three years.

View our latest analysis for Jaiprakash Power Ventures

Jaiprakash Power Ventures isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Jaiprakash Power Ventures saw its revenue shrink by 17%. So we would not have expected the share price to rise 179%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
NSEI:JPPOWER Earnings and Revenue Growth December 14th 2020

If you are thinking of buying or selling Jaiprakash Power Ventures stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Jaiprakash Power Ventures shareholders have received a total shareholder return of 179% over the last year. There's no doubt those recent returns are much better than the TSR loss of 7% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. For instance, we've identified 3 warning signs for Jaiprakash Power Ventures (1 is significant) that you should be aware of.

But note: Jaiprakash Power Ventures 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.

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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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