The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market. Unfortunately for shareholders, while the LivaNova PLC (NASDAQ:LIVN) share price is up 80% in the last five years, that's less than the market return. On a brighter note, more newer shareholders are probably rather content with the 24% share price gain over twelve months.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Given that LivaNova 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last 5 years LivaNova saw its revenue grow at 1.6% per year. Put simply, that growth rate fails to impress. Like its revenue, its share price gained over the period. The increase of 13% per year probably reflects the modest revenue growth. If profitability is likely in the near term, then this might be one to add to your watchlist.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on LivaNova's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We're pleased to report that LivaNova shareholders have received a total shareholder return of 24% over one year. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with LivaNova , and understanding them should be part of your investment process.
Of course LivaNova may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.