Rekor Systems (NASDAQ:REKR) pops 34% this week, taking three-year gains to 101%

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. For example, the Rekor Systems, Inc. (NASDAQ:REKR) share price has soared 101% in the last three years. That sort of return is as solid as granite. And in the last month, the share price has gained 94%.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

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Rekor Systems 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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 3 years Rekor Systems saw its revenue grow at 39% per year. That's much better than most loss-making companies. Along the way, the share price gained 26% per year, a solid pop by our standards. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say Rekor Systems is still worth investigating - successful businesses can often keep growing for long periods.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

This free interactive report on Rekor Systems' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Rekor Systems shareholders have received a total shareholder return of 88% over the last year. There's no doubt those recent returns are much better than the TSR loss of 11% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Rekor Systems better, we need to consider many other factors. For instance, we've identified 3 warning signs for Rekor Systems (1 is potentially serious) that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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.