Fruta Fruta (TSE:2586) delivers shareholders solid 125% return over 1 year, surging 34% in the last week alone

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right stock, you can make a lot more than 100%. Take, for example Fruta Fruta Inc. (TSE:2586). Its share price is already up an impressive 125% in the last twelve months. It's up an even more impressive 314% over the last quarter. On the other hand, longer term shareholders have had a tougher run, with the stock falling 0.6% in three years.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Fruta Fruta

Fruta Fruta wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Fruta Fruta grew its revenue by 50% last year. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 125% in response. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that Fruta Fruta shareholders have received a total shareholder return of 125% over one year. That certainly beats the loss of about 10% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Fruta Fruta better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Fruta Fruta (including 2 which are significant) .

Of course Fruta Fruta may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Japanese exchanges.

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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.