MakeMyTrip's (NASDAQ:MMYT) investors will be pleased with their favorable 64% return over the last year

By
Simply Wall St
Published
September 01, 2021
NasdaqGS:MMYT
Source: Shutterstock

The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. For example, the MakeMyTrip Limited (NASDAQ:MMYT) share price is up 64% in the last 1 year, clearly besting the market return of around 27% (not including dividends). So that should have shareholders smiling. On the other hand, longer term shareholders have had a tougher run, with the stock falling 8.2% in three years.

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

Check out our latest analysis for MakeMyTrip

Given that MakeMyTrip 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

MakeMyTrip actually shrunk its revenue over the last year, with a reduction of 50%. Despite the lack of revenue growth, the stock has returned a solid 64% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

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
NasdaqGS:MMYT Earnings and Revenue Growth September 2nd 2021

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

A Different Perspective

It's good to see that MakeMyTrip has rewarded shareholders with a total shareholder return of 64% in the last twelve months. That gain is better than the annual TSR over five years, which is 6%. 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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