Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the archTIS Limited (ASX:AR9) share price has soared 244% in the last 1 year. Most would be very happy with that, especially in just one year! Better yet, the share price has gained 349% in the last quarter. Looking back further, the stock price is 61% higher than it was three years ago.
Since the stock has added AU$22m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
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Because archTIS 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year archTIS saw its revenue shrink by 29%. So we would not have expected the share price to rise 244%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
If you are thinking of buying or selling archTIS stock, you should check out this FREE detailed report on its balance sheet.
It's good to see that archTIS has rewarded shareholders with a total shareholder return of 244% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 11% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand archTIS better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for archTIS you should be aware of, and 2 of them don't sit too well with us.
But note: archTIS 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.
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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.
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