These days it’s easy to simply buy an index fund, and your returns should (roughly) match the market. But you can significantly boost your returns by picking above-average stocks. To wit, the PlayAGS, Inc. (NYSE:AGS) share price is 13% higher than it was a year ago, much better than the market return of around 6.4% (not including dividends) in the same period. So that should have shareholders smiling. Note that businesses generally develop over the long term, so it the returns over the last year might not reflect a long term trend.
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Given that PlayAGS 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
PlayAGS grew its revenue by 35% last year. We respect that sort of growth, no doubt. While the share price performed well, gaining 13% over twelve months, you could argue the revenue growth warranted something better. If revenue stays on trend, there may be plenty more share price gains to come. But it’s crucial to check profitability and cash flow before forming a view on the future.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
PlayAGS is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
PlayAGS shareholders should be happy with the total gain of 13% over the last twelve months. And the share price momentum remains respectable, with a gain of 20% in the last three months. This suggests the company is continuing to win over new investors. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
But note: PlayAGS 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 US 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.