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Should Alamos Gold (TSE:AGI) Be Disappointed With Their 33% Profit?

Simply Wall St

If you want to compound wealth in the stock market, you can do so by buying an index fund. But you can significantly boost your returns by picking above-average stocks. For example, the Alamos Gold Inc. (TSE:AGI) share price is up 33% in the last year, clearly besting the market return of around -0.08% (not including dividends). That's a solid performance by our standards! In contrast, the longer term returns are negative, since the share price is 20% lower than it was three years ago.

See our latest analysis for Alamos Gold

Given that Alamos Gold didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 Alamos Gold saw its revenue grow by 0.2%. That's not a very high growth rate considering it doesn't make profits. In keeping with the revenue growth, the share price gained 33% in that time. While not a huge gain tht seems pretty reasonable. It could be worth keeping an eye on this one, especially if growth accelerates.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

TSX:AGI Income Statement, October 9th 2019

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Alamos Gold in this interactive graph of future profit estimates.

A Different Perspective

Pleasingly, Alamos Gold's total shareholder return last year was 34%. That includes the value of the dividend. That certainly beats the loss of about 6.7% per year over three years. It could well be that the business has turned around -- or else regained the confidence of investors. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.