The 12% return this week takes Cafe24's (KOSDAQ:042000) shareholders one-year gains to 170%

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 stock, you can make a lot more than 100%. Take, for example Cafe24 Corp. (KOSDAQ:042000). Its share price is already up an impressive 170% in the last twelve months. In more good news, the share price has risen 49% in thirty days. Unfortunately the longer term returns are not so good, with the stock falling 26% in the last three years.

The past week has proven to be lucrative for Cafe24 investors, so let's see if fundamentals drove the company's one-year performance.

Check out our latest analysis for Cafe24

Because Cafe24 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 hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year Cafe24 saw its revenue grow by 4.5%. That's not a very high growth rate considering it doesn't make profits. So we wouldn't have expected the share price to rise by 170%. We're happy that investors have made money, though we wonder if the increase will be sustained. It's quite likely that the market is considering other factors, not just revenue growth.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

Take a more thorough look at Cafe24's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Cafe24 shareholders have received a total shareholder return of 170% over the last year. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Case in point: We've spotted 2 warning signs for Cafe24 you should be aware of.

We will like Cafe24 better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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