Prime Electronics & Satellitics (TWSE:6152) hikes 11% this week, taking five-year gains to 103%

It hasn't been the best quarter for Prime Electronics & Satellitics Inc. (TWSE:6152) shareholders, since the share price has fallen 19% in that time. But that doesn't change the fact that shareholders have received really good returns over the last five years. Indeed, the share price is up an impressive 103% in that time. So while it's never fun to see a share price fall, it's important to look at a longer time horizon. Only time will tell if there is still too much optimism currently reflected in the share price.

Since the stock has added NT$218m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Prime Electronics & Satellitics

Prime Electronics & Satellitics wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last half decade Prime Electronics & Satellitics' revenue has actually been trending down at about 9.9% per year. On the other hand, the share price done the opposite, gaining 15%, compound, each year. It just goes to show tht the market is forward looking, and it's not always easy to predict the future based on past trends. Still, we are a bit cautious in this kind of situation.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

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

A Different Perspective

Prime Electronics & Satellitics' TSR for the year was broadly in line with the market average, at 29%. 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 15%. It is possible that management foresight will bring growth well into the future, even if the share price slows down. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Prime Electronics & Satellitics you should know about.

But note: Prime Electronics & Satellitics may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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