Is OFCO Industrial's (GTSM:5011) 155% Share Price Increase Well Justified?

OFCO Industrial Corporation (GTSM:5011) shareholders might be concerned after seeing the share price drop 15% in the last week. But that doesn't change the fact that the returns over the last year have been very strong. Indeed, the share price is up an impressive 155% in that time. So we think most shareholders won't be too upset about the recent fall. Investors should be wondering whether the business itself has the fundamental value required to continue to drive gains.

See our latest analysis for OFCO Industrial

Given that OFCO Industrial 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last year OFCO Industrial saw its revenue grow by 6.5%. 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 155%. The business will need a lot more growth to justify that increase. 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).

If you are thinking of buying or selling OFCO Industrial stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that OFCO Industrial shareholders have received a total shareholder return of 155% over the last year. That's better than the annualised return of 12% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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 5 warning signs for OFCO Industrial (2 don't sit too well with us) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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