It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But in contrast you can make much more than 100% if the company does well. To wit, the Appian Corporation (NASDAQ:APPN) share price has flown 286% in the last three years. That sort of return is as solid as granite. In more good news, the share price has risen 6.2% in thirty days.
Because Appian 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last 3 years Appian saw its revenue grow at 16% per year. That's pretty nice growth. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 57% per year over three years. The business has made good progress on the top line, but the market is extrapolating the growth. It would be worth thinking about when profits will flow, since that milestone will attract more attention.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Appian will earn in the future (free profit forecasts).
A Different Perspective
It's nice to see that Appian shareholders have gained 178% (in total) over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 57%. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Appian better, we need to consider many other factors. For example, we've discovered 2 warning signs for Appian that you should be aware of before investing here.
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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