Carnaby Resources (ASX:CNB) shareholder returns have been fantastic, earning 950% in 3 years

For us, stock picking is in large part the hunt for the truly magnificent stocks. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. Take, for example, the Carnaby Resources Limited (ASX:CNB) share price, which skyrocketed 950% over three years. And in the last month, the share price has gained 177%. It really delights us to see such great share price performance for investors.

The past week has proven to be lucrative for Carnaby Resources investors, so let's see if fundamentals drove the company's three-year performance.

View our latest analysis for Carnaby Resources

We don't think that Carnaby Resources' modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 3 years Carnaby Resources saw its revenue grow at 136% per year. That's well above most pre-profit companies. And it's not just the revenue that is taking off. The share price is up 119% per year in that time. It's always tempting to take profits after a share price gain like that, but high-growth companies like Carnaby Resources can sometimes sustain strong growth for many years. In fact, it might be time to put it on your watchlist, if you're not already familiar with the stock.

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

If you are thinking of buying or selling Carnaby Resources stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Carnaby Resources shareholders have received a total shareholder return of 93% over one year. That gain is better than the annual TSR over five years, which is 37%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Carnaby Resources you should know about.

We will like Carnaby Resources better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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