Those who invested in Electro Optic Systems Holdings (ASX:EOS) a year ago are up 199%

It might be of some concern to shareholders to see the Electro Optic Systems Holdings Limited (ASX:EOS) share price down 19% in the last month. Despite this, the stock is a strong performer over the last year, no doubt about that. During that period, the share price soared a full 199%. So it is important to view the recent reduction in price through that lense. More important, going forward, is how the business itself is going.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Electro Optic Systems Holdings

Because Electro Optic Systems Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Electro Optic Systems Holdings saw its revenue grow by 59%. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 199% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's nice to see that Electro Optic Systems Holdings shareholders have received a total shareholder return of 199% over the last year. That certainly beats the loss of about 7% 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. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Electro Optic Systems Holdings , and understanding them should be part of your investment process.

But note: Electro Optic Systems Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

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

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.