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Should Atomos (ASX:AMS) Be Disappointed With Their 57% Profit?

Simply Wall St

The last three months have been tough on Atomos Limited (ASX:AMS) shareholders, who have seen the share price decline a rather worrying 34%. But looking back over the last year, the returns have actually been rather pleasing! To wit, it had solidly beat the market, up 57%.

See our latest analysis for Atomos

Atomos wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong 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.

Over the last twelve months, Atomos's revenue grew by 51%. That's well above most other pre-profit companies. While the share price gain of 57% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Atomos. Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.

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

ASX:AMS Income Statement, February 18th 2020

Take a more thorough look at Atomos's financial health with this free report on its balance sheet.

A Different Perspective

It's nice to see that Atomos shareholders have gained 57% over the last year. We regret to report that the share price is down 34% over ninety days. Shorter term share price moves often don't signify much about the business itself. It's always interesting to track share price performance over the longer term. But to understand Atomos better, we need to consider many other factors. For example, we've discovered 3 warning signs for Atomos (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

We will like Atomos 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.

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.

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. Thank you for reading.