Yahoo Finance Recent 8.9% pullback isn't enough to hurt long-term Megaport (ASX:MP1) shareholders, they're still up 221% over 1 year
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 Megaport Limited (ASX:MP1) share price has soared 221% return in just a single year. It's also good to see the share price up 53% over the last quarter. However, the stock hasn't done so well in the longer term, with the stock only up 11% in three years.
In light of the stock dropping 8.9% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.
Check out our latest analysis for Megaport
We don't think that Megaport's 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. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
Megaport grew its revenue by 42% last year. We respect that sort of growth, no doubt. The revenue growth is decent but the share price had an even better year, gaining 221%. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Megaport will earn in the future (free profit forecasts).
A Different Perspective
It's nice to see that Megaport shareholders have received a total shareholder return of 221% over the last year. That gain is better than the annual TSR over five years, which is 25%. 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. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian 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.
