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Introducing XTEK (ASX:XTE), A Stock That Climbed 15% In The Last Three Years

The last three months have been tough on XTEK Limited (ASX:XTE) shareholders, who have seen the share price decline a rather worrying 43%. But that doesn't change the fact that the returns over the last three years have been pleasing. In fact, the company's share price bested the return of its market index in that time, posting a gain of 15%.

See our latest analysis for XTEK

XTEK 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.

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XTEK's revenue trended up 67% each year over three years. That's well above most pre-profit companies. While the compound gain of 4.9% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at XTEK. If the company is trending towards profitability then it could be very interesting.

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

ASX:XTE Income Statement March 31st 2020
ASX:XTE Income Statement March 31st 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

It's good to see that XTEK has rewarded shareholders with a total shareholder return of 5.1% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 1.5% per year), it would seem that the stock's performance has improved in recent times. 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 XTEK better, we need to consider many other factors. Take risks, for example - XTEK has 5 warning signs (and 1 which can't be ignored) we think you should know about.

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 AU exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.