It hasn't been the best quarter for Conformis, Inc. (NASDAQ:CFMS) shareholders, since the share price has fallen 29% in that time. But that isn't a problem when you consider how the share price has soared over the last year. Indeed, the share price is up a whopping 341% in that time. So it is not that surprising to see the stock retrace a little. The real question is whether the fundamental business performance can justify the strong increase over the long term.
Because Conformis 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Conformis actually shrunk its revenue over the last year, with a reduction of 10%. So it's very confusing to see that the share price gained a whopping 341%. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. While this gain looks like speculative buying to us, sometimes speculation pays off.
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 Conformis'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 Conformis rewarded shareholders with a total shareholder return of 341% over the last year. This recent result is much better than the 42% drop suffered by shareholders each year (on average) over the last three. It could well be that the business has turned around -- or else regained the confidence of investors. Before spending more time on Conformis it might be wise to click here to see if insiders have been buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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 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.
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