Yahoo Finance Q2 Holdings (NYSE:QTWO) increases 5.6% this week, taking one-year gains to 130%
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 Q2 Holdings, Inc. (NYSE:QTWO) share price has soared 130% return in just a single year. Also pleasing for shareholders was the 27% gain in the last three months. Unfortunately the longer term returns are not so good, with the stock falling 48% in the last three years.
The past week has proven to be lucrative for Q2 Holdings investors, so let's see if fundamentals drove the company's one-year performance.
See our latest analysis for Q2 Holdings
Given that Q2 Holdings didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Q2 Holdings grew its revenue by 10% last year. That's not great considering the company is losing money. So we wouldn't have expected the share price to rise by 130%. The business will need a lot more growth to justify that increase. It's quite likely that the market is considering other factors, not just revenue growth.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Q2 Holdings is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
We're pleased to report that Q2 Holdings shareholders have received a total shareholder return of 130% over one year. Notably the five-year annualised TSR loss of 4% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Even so, be aware that Q2 Holdings is showing 2 warning signs in our investment analysis , you should know about...
We will like Q2 Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.
