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Did The Underlying Business Drive Eagle Bulk Shipping's (NASDAQ:EGLE) Lovely 307% Share Price Gain?

While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. When you find (and hold) a big winner, you can markedly improve your finances. For example, the Eagle Bulk Shipping Inc. (NASDAQ:EGLE) share price is up a whopping 307% in the last year, a handsome return in a single year. On top of that, the share price is up 115% in about a quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Having said that, the longer term returns aren't so impressive, with stock gaining just 23% in three years.

View our latest analysis for Eagle Bulk Shipping

Eagle Bulk Shipping wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.

In the last year Eagle Bulk Shipping saw its revenue grow by 2.8%. That's not a very high growth rate considering it doesn't make profits. So it's truly surprising that the share price rocketed 307% in a single year. We're happy that investors have made money, but we can't help questioning whether the rise is sustainable. It just goes to show that big money can be made if you buy the right stock early.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Eagle Bulk Shipping stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

It's good to see that Eagle Bulk Shipping has rewarded shareholders with a total shareholder return of 307% in the last twelve months. That certainly beats the loss of about 6% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 2 warning signs for Eagle Bulk Shipping that you should be aware of before investing here.

Eagle Bulk Shipping is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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