Stock Analysis

If You Had Bought Performant Financial (NASDAQ:PFMT) Shares A Year Ago You'd Have Earned 542% Returns

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While stock picking isn't easy, for those willing to persist and learn, it is possible to buy shares in great companies, and generate wonderful returns. When you find (and hold) a big winner, you can markedly improve your finances. In the case of Performant Financial Corporation (NASDAQ:PFMT), the share price is up an incredible 542% in the last year alone. Also pleasing for shareholders was the 234% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. And shareholders have also done well over the long term, with an increase of 86% in the last three years.

Anyone who held for that rewarding ride would probably be keen to talk about it.

View our latest analysis for Performant Financial

Given that Performant Financial 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Performant Financial actually shrunk its revenue over the last year, with a reduction of 12%. So it's very confusing to see that the share price gained a whopping 542%. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. While this gain looks like speculative buying to us, sometimes speculation pays off.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NasdaqGS:PFMT Earnings and Revenue Growth June 4th 2021

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Performant Financial's earnings, revenue and cash flow.

A Different Perspective

It's good to see that Performant Financial has rewarded shareholders with a total shareholder return of 542% in the last twelve months. That's better than the annualised return of 20% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Performant Financial (of which 1 is significant!) 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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What are the risks and opportunities for Performant Financial?

Performant Financial Corporation provides technology-enabled audit, recovery, and analytics services in the United States.

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  • Trading at 80.4% below our estimate of its fair value

  • Earnings are forecast to grow 63.79% per year

  • Earnings have grown 7.9% per year over the past 5 years


  • Shareholders have been diluted in the past year

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