Is GLOME HoldingsInc's (TYO:8938) Share Price Gain Of 125% Well Earned?

By
Simply Wall St
Published
February 03, 2021
JASDAQ:8938
Source: Shutterstock

GLOME Holdings,Inc. (TYO:8938) shareholders have seen the share price descend 26% over the month. But in stark contrast, the returns over the last half decade have impressed. Indeed, the share price is up an impressive 125% in that time. To some, the recent pullback wouldn't be surprising after such a fast rise. Ultimately business performance will determine whether the stock price continues the positive long term trend.

View our latest analysis for GLOME HoldingsInc

Because GLOME HoldingsInc 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. 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 5 years GLOME HoldingsInc saw its revenue grow at 2.3% per year. That's not a very high growth rate considering the bottom line. In comparison, the share price rise of 18% per year over the last half a decade is pretty impressive. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. Some might suggest that the sentiment around the stock is rather positive.

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

earnings-and-revenue-growth
JASDAQ:8938 Earnings and Revenue Growth February 4th 2021

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.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between GLOME HoldingsInc's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. GLOME HoldingsInc's TSR of 129% for the 5 years exceeded its share price return, because it has paid dividends.

A Different Perspective

We're pleased to report that GLOME HoldingsInc shareholders have received a total shareholder return of 20% over one year. That gain is better than the annual TSR over five years, which is 18%. 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. It's always interesting to track share price performance over the longer term. But to understand GLOME HoldingsInc better, we need to consider many other factors. Even so, be aware that GLOME HoldingsInc is showing 3 warning signs in our investment analysis , and 2 of those are significant...

Of course GLOME HoldingsInc 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 JP 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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