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Shareholders Are Raving About How The Silex Systems (ASX:SLX) Share Price Increased 313%

It hasn't been the best quarter for Silex Systems Limited (ASX:SLX) shareholders, since the share price has fallen 10% in that time. But over three years the performance has been really wonderful. In fact, the share price has taken off in that time, up 313%. As long term investors the recent fall doesn't detract all that much from the longer term story. The share price action could signify that the business itself is dramatically improved, in that time.

See our latest analysis for Silex Systems

Silex Systems 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Silex Systems' revenue trended up 4.3% each year over three years. That's not a very high growth rate considering it doesn't make profits. So we're surprised that the share price has soared by 60% each year over that time. We'll tip our hats to that, any day, but the top-line growth isn't particularly impressive when you compare it to other pre-profit companies. The company will need to continue to execute on its business strategy to justify this rise.

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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
earnings-and-revenue-growth

This free interactive report on Silex Systems' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Silex Systems has rewarded shareholders with a total shareholder return of 43% in the last twelve months. That's better than the annualised return of 27% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Silex Systems has 2 warning signs (and 1 which can't be ignored) we think you should know about.

Of course Silex Systems may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.