Yahoo Finance The 25% return this week takes Audioboom Group's (LON:BOOM) shareholders five-year gains to 177%
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. Long term Audioboom Group plc (LON:BOOM) shareholders would be well aware of this, since the stock is up 177% in five years. On top of that, the share price is up 64% in about a quarter.
The past week has proven to be lucrative for Audioboom Group investors, so let's see if fundamentals drove the company's five-year performance.
See our latest analysis for Audioboom Group
Audioboom 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
For the last half decade, Audioboom Group can boast revenue growth at a rate of 36% per year. That's well above most pre-profit companies. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 23% per year, in that time. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes Audioboom Group worth investigating - it may have its best days ahead.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Audioboom Group will earn in the future (free profit forecasts).
A Different Perspective
While the broader market gained around 3.1% in the last year, Audioboom Group shareholders lost 45%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 23%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Audioboom Group better, we need to consider many other factors. For instance, we've identified 3 warning signs for Audioboom Group (1 is potentially serious) that you should be aware of.
Audioboom Group is not the only stock that insiders are buying. 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 British 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.
