Did Business Growth Power Pioneer Power Solutions' (NASDAQ:PPSI) Share Price Gain of 155%?

By
Simply Wall St
Published
January 20, 2021
NasdaqCM:PPSI
Source: Shutterstock

Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Pioneer Power Solutions, Inc. (NASDAQ:PPSI) share price had more than doubled in just one year - up 155%. Also pleasing for shareholders was the 111% gain in the last three months. Zooming out, the stock is actually down 20% in the last three years.

Check out our latest analysis for Pioneer Power Solutions

Because Pioneer Power Solutions 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Pioneer Power Solutions saw its revenue grow by 7.1%. That's not a very high growth rate considering it doesn't make profits. In contrast, the share price took off during the year, gaining 155%. We're happy that investors have made money, though we wonder if the increase will be sustained. We're not so sure that revenue growth is driving the market optimism about the stock.

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

earnings-and-revenue-growth
NasdaqCM:PPSI Earnings and Revenue Growth January 21st 2021

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We're pleased to report that Pioneer Power Solutions shareholders have received a total shareholder return of 155% over one year. That gain is better than the annual TSR over five years, which is 20%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Pioneer Power Solutions better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Pioneer Power Solutions (of which 2 don't sit too well with us!) you should know about.

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 US 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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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.