By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at Basic-Fit N.V. (AMS:BFIT), which is up 91%, over three years, soundly beating the market return of 31% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 15% in the last year.
While Basic-Fit made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 3 years Basic-Fit saw its revenue grow at 22% per year. That's well above most pre-profit companies. While the compound gain of 24% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put Basic-Fit on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how Basic-Fit has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
While the market return was 15% in the last year, Basic-Fit returned 15% to shareholders. Notably, the longer term shareholders are better off with their TSR of 24% per year over the last three years. Share price gains are anything but steady, so it's a positive to see that the longer term returns are reasonable. You could get a better understanding of Basic-Fit's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
But note: Basic-Fit may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NL 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 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.