The 16% return this week takes Genesco's (NYSE:GCO) shareholders one-year gains to 261%
When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Genesco Inc. (NYSE:GCO) share price had more than doubled in just one year - up 261%. On top of that, the share price is up 27% in about a quarter. And shareholders have also done well over the long term, with an increase of 55% in the last three years.
The past week has proven to be lucrative for Genesco investors, so let's see if fundamentals drove the company's one-year performance.
See our latest analysis for Genesco
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Genesco went from making a loss to reporting a profit, in the last year.
When a company has just transitioned to profitability, earnings per share growth is not always the best way to look at the share price action.
We think that the revenue growth of 17% could have some investors interested. Many businesses do go through a phase where they have to forgo some profits to drive business development, and sometimes its for the best.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for Genesco in this interactive graph of future profit estimates.
A Different Perspective
It's good to see that Genesco has rewarded shareholders with a total shareholder return of 261% in the last twelve months. That gain is better than the annual TSR over five years, which is 2%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Genesco better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Genesco (of which 1 shouldn't be ignored!) you should know about.
Genesco is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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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