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When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the TransMedics Group, Inc. (NASDAQ:TMDX) share price has soared 101% return in just a single year. It's also up 18% in about a month. We'll need to follow TransMedics Group for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
TransMedics Group 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. 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.
Over the last twelve months, TransMedics Group's revenue grew by 24%. That's a fairly respectable growth rate. While that revenue growth is pretty good the share price performance outshone it, with a lift of 101% as mentioned above. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. Of course, we are always cautious about succumbing to 'fear of missing out' when a stock has shot up strongly.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
If you are thinking of buying or selling TransMedics Group stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
TransMedics Group shareholders should be happy with the total gain of 101% over the last twelve months. The more recent returns haven't been as impressive as the longer term returns, coming in at just 9.5%. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). If you would like to research TransMedics Group in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
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. 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.
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