While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. When you buy and hold the right company, the returns can make a huge difference to both you and your family. For example, the QEP Resources, Inc. (NYSE:QEP) share price rocketed moonwards 660% in just one year. On top of that, the share price is up 79% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. On the other hand, longer term shareholders have had a tougher run, with the stock falling 51% in three years.
It really delights us to see such great share price performance for investors.
We don't think that QEP Resources' modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
QEP Resources actually shrunk its revenue over the last year, with a reduction of 40%. So it's very confusing to see that the share price gained a whopping 660%. It's pretty clear the market isn't basing its valuation on fundamental metrics like revenue. While this gain looks like speculative buying to us, sometimes speculation pays off.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We know that QEP Resources has improved its bottom line lately, but what does the future have in store? If you are thinking of buying or selling QEP Resources stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
It's good to see that QEP Resources has rewarded shareholders with a total shareholder return of 660% in the last twelve months. That certainly beats the loss of about 11% per year over the last half decade. 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 QEP Resources better, we need to consider many other factors. For instance, we've identified 3 warning signs for QEP Resources (1 is significant) that you should be aware of.
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 US 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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