Imagine Holding Serko (NZSE:SKO) Shares While The Price Zoomed 553% Higher

For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. For example, the Serko Limited (NZSE:SKO) share price is up a whopping 553% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 30% in about a quarter.

It really delights us to see such great share price performance for investors.

Check out our latest analysis for Serko

Because Serko 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

For the last half decade, Serko can boast revenue growth at a rate of 14% per year. That's a pretty good long term growth rate. However, the share price gain of 46% during the period is considerably stronger. We usually like strong growth stocks but it does seem the market already appreciates this one quite well!

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on Serko's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Serko shareholders have received a total shareholder return of 21% over the last year. However, the TSR over five years, coming in at 46% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 4 warning signs for Serko you should be aware of.

Of course Serko may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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This article by Simply Wall St is general in nature. 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.
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