Did Business Growth Power Coventry Group's (ASX:CYG) Share Price Gain of 111%?

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Coventry Group Ltd (ASX:CYG) share price has soared 111% return in just a single year. Also pleasing for shareholders was the 35% gain in the last three months. However, the longer term returns haven't been so impressive, with the stock up just 13% in the last three years.

Check out our latest analysis for Coventry Group

While Coventry Group made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. 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.

Coventry Group grew its revenue by 12% last year. That's not a very high growth rate considering it doesn't make profits. In contrast, the share price took off during the year, gaining 111%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

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

A Different Perspective

It's nice to see that Coventry Group shareholders have received a total shareholder return of 111% over the last year. That's better than the annualised return of 8% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Coventry Group better, we need to consider many other factors. To that end, you should be aware of the 4 warning signs we've spotted with Coventry Group .

But note: Coventry Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

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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