Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. To wit, the Azure Power Global Limited (NYSE:AZRE) share price is 55% higher than it was a year ago, much better than the market return of around 6.7% (not including dividends) in the same period. So that should have shareholders smiling. Zooming out, the stock is actually down 5.4% in the last three years.
Because Azure Power Global made a loss in the last twelve months, 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. 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, Azure Power Global's revenue grew by 30%. We respect that sort of growth, no doubt. While the share price performed well, gaining 55% over twelve months, you could argue the revenue growth warranted it. If revenue stays on trend, there may be plenty more share price gains to come. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Azure Power Global's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We're pleased to report that Azure Power Global rewarded shareholders with a total shareholder return of 55% over the last year. What is absolutely clear is that is far preferable to the dismal 1.8% average annual loss suffered over the last three years. It could well be that the business has turned around -- or else regained the confidence of investors. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Azure Power Global is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...
Of course Azure Power Global may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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. 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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