Did Aveng's (JSE:AEG) Share Price Deserve to Gain 100%?

By
Simply Wall St
Published
February 20, 2021
JSE:AEG
Source: Shutterstock

Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Aveng Limited (JSE:AEG) share price is up 100% in the last year, clearly besting the market return of around 6.4% (not including dividends). That's a solid performance by our standards! Zooming out, the stock is actually down 98% in the last three years.

See our latest analysis for Aveng

Because Aveng 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.

Over the last twelve months, Aveng's revenue grew by 4.7%. That's not great considering the company is losing money. In keeping with the revenue growth, the share price gained 100% in that time. That's not a standout result, but it is solid - much like the level of revenue growth. It could be worth keeping an eye on this one, especially if growth accelerates.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
JSE:AEG Earnings and Revenue Growth February 21st 2021

Take a more thorough look at Aveng's financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that Aveng has rewarded shareholders with a total shareholder return of 100% in the last twelve months. Notably the five-year annualised TSR loss of 15% 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. It's always interesting to track share price performance over the longer term. But to understand Aveng better, we need to consider many other factors. For example, we've discovered 3 warning signs for Aveng (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on ZA 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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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.