Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Unidata S.p.A. (BIT:UD) share price is up 82% in the last year, clearly besting the market return of around 54% (not including dividends). That's a solid performance by our standards! We'll need to follow Unidata for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Because Unidata 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Unidata saw its revenue grow by 24%. We respect that sort of growth, no doubt. Buyers pushed the share price 82% in response, which isn't unreasonable. If revenue stays on trend, there may be plenty more share price gains to come. But it's crucial to check profitability and cash flow before forming a view on the future.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at Unidata's financial health with this free report on its balance sheet.
A Different Perspective
Unidata shareholders should be happy with the total gain of 82% over the last twelve months. And the share price momentum remains respectable, with a gain of 24% in the last three months. This suggests the company is continuing to win over new investors. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Unidata is showing 1 warning sign in our investment analysis , you should know about...
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IT exchanges.
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