Aeeris Limited (ASX:AER) shareholders might be concerned after seeing the share price drop 24% in the last month. But that doesn't change the fact that the returns over the last year have been very strong. Indeed, the share price is up an impressive 112% in that time. So it may be that the share price is simply cooling off after a strong rise. More important, going forward, is how the business itself is going.
Aeeris isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Aeeris grew its revenue by 18% last year. We respect that sort of growth, no doubt. While that revenue growth is pretty good the share price performance outshone it, with a lift of 112% as mentioned above. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
We're pleased to report that Aeeris rewarded shareholders with a total shareholder return of 112% over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 11%. The improving returns to shareholders suggests the stock is becoming more popular with time. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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