Investors bid NuZee (NASDAQ:NUZE) up US$58m despite increasing losses YoY, taking five-year CAGR to 55%

By
Simply Wall St
Published
November 11, 2021
NasdaqCM:NUZE
Source: Shutterstock

Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. To wit, the NuZee, Inc. (NASDAQ:NUZE) share price has soared 782% over five years. And this is just one example of the epic gains achieved by some long term investors. In more good news, the share price has risen 171% in thirty days. We love happy stories like this one. The company should be really proud of that performance!

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for NuZee

Because NuZee 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 expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, NuZee can boast revenue growth at a rate of 12% per year. That's a pretty good long term growth rate. However, the share price gain of 55% during the period is considerably stronger. We usually like strong growth stocks but it does seem the market already appreciates this one quite well!

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:NUZE Earnings and Revenue Growth November 12th 2021

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on NuZee's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

NuZee shareholders are down 56% for the year, but the market itself is up 32%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 55%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand NuZee better, we need to consider many other factors. For instance, we've identified 5 warning signs for NuZee (1 is a bit unpleasant) that you should be aware of.

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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