The 18% return this week takes Axtel. de's (BMV:AXTELCPO) shareholders one-year gains to 188%

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Axtel, S.A.B. de C.V. (BMV:AXTELCPO) share price has soared 188% in the last 1 year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 125% gain in the last three months. Unfortunately the longer term returns are not so good, with the stock falling 14% in the last three years.

Since it's been a strong week for Axtel. de shareholders, let's have a look at trend of the longer term fundamentals.

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Given that Axtel. de didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually desire strong 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.

Axtel. de grew its revenue by 5.5% last year. 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 188%. We're happy that investors have made money, though we wonder if the increase will be sustained. We're not so sure that revenue growth is driving the market optimism about the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

This free interactive report on Axtel. de'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 Axtel. de has rewarded shareholders with a total shareholder return of 188% in the last twelve months. There's no doubt those recent returns are much better than the TSR loss of 2% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. 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. Take risks, for example - Axtel. de has 1 warning sign we think 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 Mexican 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.