Investors ignore increasing losses at Amotech (KOSDAQ:052710) as stock jumps 11% this past week

The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Amotech Co., Ltd. (KOSDAQ:052710) share price is 55% higher than it was a year ago, much better than the market return of around 2.9% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! On the other hand, longer term shareholders have had a tougher run, with the stock falling 25% in three years.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

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Because Amotech 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 desire 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.

Over the last twelve months, Amotech's revenue grew by 20%. That's a fairly respectable growth rate. Buyers pushed the share price 55% in response, which isn't unreasonable. If the company can maintain the revenue growth, the share price could go higher still. But it's crucial to check profitability and cash flow before forming a view on the future.

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

This free interactive report on Amotech'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 Amotech has rewarded shareholders with a total shareholder return of 55% in the last twelve months. That certainly beats the loss of about 8% 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 Amotech better, we need to consider many other factors. For instance, we've identified 3 warning signs for Amotech (2 are significant) that you should be aware of.

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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.