Sansan (TSE:4443) delivers shareholders favorable 75% return over 1 year, surging 9.8% in the last week alone

If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Sansan, Inc. (TSE:4443) share price is 75% higher than it was a year ago, much better than the market return of around 5.6% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! And shareholders have also done well over the long term, with an increase of 44% in the last three years.

The past week has proven to be lucrative for Sansan investors, so let's see if fundamentals drove the company's one-year performance.

See our latest analysis for Sansan

While Sansan made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

Over the last twelve months, Sansan's revenue grew by 30%. We respect that sort of growth, no doubt. While the share price performed well, gaining 75% over twelve months, you could argue the revenue growth warranted it. 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 image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

We know that Sansan has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Sansan's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Sansan has rewarded shareholders with a total shareholder return of 75% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 8% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should be aware of the 1 warning sign we've spotted with Sansan .

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.