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 Afterpay Touch Group Limited (ASX:APT) share price had more than doubled in just one year - up 112%. In more good news, the share price has risen 12% in thirty days. Afterpay Touch Group hasn't been listed for long, so it's still not clear if it is a long term winner.
Because Afterpay Touch Group is loss-making, 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 expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year Afterpay Touch Group saw its revenue grow by 91%. That's stonking growth even when compared to other loss-making stocks. And the share price has responded, gaining 112% as we previously mentioned. It's great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
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. If you are thinking of buying or selling Afterpay Touch Group stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Afterpay Touch Group shareholders should be happy with the total gain of 112% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 29% in that time. This suggests the company is continuing to win over new investors. If you would like to research Afterpay Touch Group in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like Afterpay Touch Group 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 AU exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.