The Lyko Group (STO:LYKO A) Share Price Is Up 487% And Shareholders Are Delighted

Lyko Group AB (publ) (STO:LYKO A) shareholders might be concerned after seeing the share price drop 22% in the last quarter. But that doesn't displace its brilliant performance over three years. Indeed, the share price is up a whopping 487% in that time. As long term investors the recent fall doesn't detract all that much from the longer term story. The only way to form a view of whether the current price is justified is to consider the merits of the business itself.

See our latest analysis for Lyko Group

Given that Lyko Group 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 expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years Lyko Group has grown its revenue at 24% annually. That's much better than most loss-making companies. And it's not just the revenue that is taking off. The share price is up 80% per year in that time. It's always tempting to take profits after a share price gain like that, but high-growth companies like Lyko Group can sometimes sustain strong growth for many years. So we'd recommend you take a closer look at this one, or even put it on your watchlist.

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

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. This free interactive report on Lyko Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

We're pleased to report that Lyko Group rewarded shareholders with a total shareholder return of 256% over the last year. That gain actually surpasses the 80% TSR it generated (per year) over three years. The improving returns to shareholders suggests the stock is becoming more popular with time. 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. For instance, we've identified 1 warning sign for Lyko Group that you should be aware of.

Lyko Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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