It’s been a soft week for SGOCO Group, Ltd. (NASDAQ:SGOC) shares, which are down 11%. But that doesn’t displace its brilliant performance over three years. Over that time, we’ve been excited to watch the share price climb an impressive 746%. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. Only time will tell if there is still too much optimism currently reflected in the share price.
We love happy stories like this one. The company should be really proud of that performance!
SGOCO 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. When a company doesn’t make profits, we’d generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 3 years SGOCO Group saw its revenue grow at 62% per year. That’s well above most pre-profit companies. And it’s not just the revenue that is taking off. The share price is up 104% per year in that time. Despite the strong run, top performers like SGOCO Group have been known to go on winning for decades. In fact, it might be time to put it on your watchlist, if you’re not already familiar with the stock.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at SGOCO Group’s financial health with this free report on its balance sheet.
A Different Perspective
It’s nice to see that SGOCO Group shareholders have received a total shareholder return of 707% over the last year. That’s better than the annualised return of 17% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It’s always interesting to track share price performance over the longer term. But to understand SGOCO Group better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we’ve spotted with SGOCO Group (including 1 which can’t be ignored) .
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. 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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