The 5.8% return this week takes Despegar.com's (NYSE:DESP) shareholders one-year gains to 120%

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Despegar.com, Corp. (NYSE:DESP) share price has soared 120% return in just a single year. On top of that, the share price is up 43% in about a quarter. It is also impressive that the stock is up 32% over three years, adding to the sense that it is a real winner.

Since it's been a strong week for Despegar.com shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Despegar.com

Because Despegar.com 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. Shareholders of unprofitable companies usually desire 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 Despegar.com saw its revenue grow by 20%. We respect that sort of growth, no doubt. The revenue growth is decent but the share price had an even better year, gaining 120%. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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

A Different Perspective

We're pleased to report that Despegar.com shareholders have received a total shareholder return of 120% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 6% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Despegar.com better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Despegar.com you should know about.

If you are like me, then you will not want to miss this free list of undervalued small caps 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 American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.