Gogo Inc. (NASDAQ:GOGO) shareholders will doubtless be very grateful to see the share price up 58% in the last quarter. But don’t envy holders — looking back over 5 years the returns have been really bad. The share price has failed to impress anyone , down a sizable 64% during that time. So we’re not so sure if the recent bounce should be celebrated. Of course, this could be the start of a turnaround.
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Given that Gogo didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over five years, Gogo grew its revenue at 19% per year. That’s better than most loss-making companies. Unfortunately for shareholders the share price has dropped 18% per year – disappointing considering the growth. This could mean high expectations have been tempered, potentially because investors are looking to the bottom line. If you think the company can keep up its revenue growth, you’d have to consider the possibility that there’s an opportunity here.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for Gogo in this interactive graph of future profit estimates.
A Different Perspective
It’s nice to see that Gogo shareholders have received a total shareholder return of 12% over the last year. Notably the five-year annualised TSR loss of 18% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Gogo by clicking this link.
Gogo is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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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