One way to deal with stock volatility is to ensure you have a properly diverse portfolio. But the goal is to pick stocks that do better than average. One such company is iQIYI, Inc. (NASDAQ:IQ), which saw its share price increase 22% in the last year, slightly above the market return of around 22% (not including dividends). We'll need to follow iQIYI for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
iQIYI isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
iQIYI grew its revenue by 6.8% last year. That's not a very high growth rate considering it doesn't make profits. In keeping with the revenue growth, the share price gained 22% in that time. That's not a standout result, but it is solid - much like the level of revenue growth. It could be worth keeping an eye on this one, especially if growth accelerates.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
iQIYI is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
With a TSR of 22% over the last year, iQIYI shareholders would be reasonably content, given that's not far from the broader market return of 24%. A substantial portion of that gain has come in the last three months, with the stock up 22% in that time. This suggests the share price maintains some momentum, and investors are taking a more positive view of the stock. 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. To that end, you should be aware of the 3 warning signs we've spotted with iQIYI .
We will like iQIYI better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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This article by Simply Wall St is general in nature. 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.
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