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Did MagnaChip Semiconductor's (NYSE:MX) Share Price Deserve to Gain 91%?

Simply Wall St

By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger returns, and build a portfolio ourselves. For example, MagnaChip Semiconductor Corporation (NYSE:MX) shareholders have seen the share price rise 91% over three years, well in excess of the market return (36%, not including dividends).

View our latest analysis for MagnaChip Semiconductor

Given that MagnaChip Semiconductor 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over the last three years MagnaChip Semiconductor has grown its revenue at 4.4% annually. Considering the company is losing money, we think that rate of revenue growth is uninspiring. The modest growth is probably broadly reflected in the share price, which is up 24%, per year over 3 years. Ultimately, the important thing is whether the company is trending to profitability. In this sort of situation it can be worth putting the stock on your watchlist. If it can become profitable, then even moderate revenue growth could grow profits quickly.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NYSE:MX Income Statement, December 9th 2019
NYSE:MX Income Statement, December 9th 2019

If you are thinking of buying or selling MagnaChip Semiconductor stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that MagnaChip Semiconductor shareholders have received a total shareholder return of 85% over the last year. Notably the five-year annualised TSR loss of 1.5% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. You could get a better understanding of MagnaChip Semiconductor's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

We will like MagnaChip Semiconductor 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 US 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.