Stock Analysis

Can You Imagine How Elated CarParts.com's (NASDAQ:PRTS) Shareholders Feel About Its 805% Share Price Gain?

  •  Updated
NasdaqGS:PRTS
Source: Shutterstock

Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. But when you hold the right stock for the right time period, the rewards can be truly huge. One such superstar is CarParts.com, Inc. (NASDAQ:PRTS), which saw its share price soar 805% in three years. It's also up 58% in about a month.

It really delights us to see such great share price performance for investors.

Check out our latest analysis for CarParts.com

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

CarParts.com's revenue trended up 4.0% each year over three years. Considering the company is losing money, we think that rate of revenue growth is uninspiring. So we're surprised that the share price has soared by 108% each year over that time. A win is a win, even if the revenue growth doesn't really explain it, in our view). The company will need to continue to execute on its business strategy to justify this rise.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGS:PRTS Earnings and Revenue Growth February 22nd 2021

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on CarParts.com

A Different Perspective

We're pleased to report that CarParts.com shareholders have received a total shareholder return of 607% over one year. That gain is better than the annual TSR over five years, which is 47%. Therefore it seems like sentiment around the company has been positive lately. 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 CarParts.com better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for CarParts.com you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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What are the risks and opportunities for CarParts.com?

CarParts.com, Inc., together with its subsidiaries, operates as an online provider of aftermarket auto parts and accessories in the United States and the Philippines.

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Rewards

  • Trading at 76.2% below our estimate of its fair value

  • Earnings are forecast to grow 54.48% per year

  • Became profitable this year

Risks

  • Shareholders have been diluted in the past year

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Share Price

Market Cap

1Y Return

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