While Datasea Inc. (NASDAQ:DTSS) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 30% in the last quarter. But at least the stock is up over the last year. However, its return of 12% does fall short of the market return of, 25%.
Datasea wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Datasea saw its revenue grow by 151%. That's stonking growth even when compared to other loss-making stocks. Let's face it the 12% share price gain in that time is underwhelming compared to the growth. When revenue spikes but the share price doesn't we can't help wondering if the market is missing something. It's possible that the market is worried about the losses, or simply that the growth was already priced in. Or, this could be worth adding to your watchlist.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Datasea's earnings, revenue and cash flow.
A Different Perspective
Datasea shareholders have gained 12% for the year. Unfortunately this falls short of the market return of around 25%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 42% in the last three months. It might be that investors are more concerned about the business lately due to some fundamental change (or else the share price simply got ahead of itself, previously). 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. For example, we've discovered 5 warning signs for Datasea (2 are a bit unpleasant!) that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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