Grieg Seafood (OB:GSF) ascends 8.9% this week, taking one-year gains to 13%

If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Grieg Seafood ASA (OB:GSF) share price is 13% higher than it was a year ago, much better than the market return of around 6.5% (not including dividends) in the same period. So that should have shareholders smiling. Longer term, the stock is up 13% in three years.

Since the stock has added kr673m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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Grieg Seafood isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 Grieg Seafood saw its revenue grow by 65%. That's stonking growth even when compared to other loss-making stocks. The solid 13% share price gain goes down pretty well, but it's not necessarily as good as you might expect given the top notch revenue growth. If that's the case, now might be the time to take a close look at Grieg Seafood. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Grieg Seafood stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Grieg Seafood provided a TSR of 13% over the year. That's fairly close to the broader market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 3%. It is possible that management foresight will bring growth well into the future, even if the share price slows down. It's always interesting to track share price performance over the longer term. But to understand Grieg Seafood better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Grieg Seafood you should be aware of.

Grieg Seafood is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket.

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