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Tesserent Limited (ASX:TNT) shareholders might understandably be very concerned that the share price has dropped 32% in the last quarter. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. In that time, shareholders have had the pleasure of a 314% boost to the share price. So the recent fall isn't enough to negate the good performance. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).
Tesserent 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over the last twelve months, Tesserent's revenue grew by 459%. That's well above most other pre-profit companies. But the share price has really rocketed in response gaining 314% as previously mentioned. Despite the strong growth, it's certainly possible the market has gotten a little over-excited. So this looks like a great watchlist candidate for investors who look for high growth inflexion points.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Tesserent's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that Tesserent has rewarded shareholders with a total shareholder return of 314% in the last twelve months. That gain is better than the annual TSR over five years, which is 4%. 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. It's always interesting to track share price performance over the longer term. But to understand Tesserent better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Tesserent you should be aware of, and 2 of them are potentially serious.
Tesserent is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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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