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Did The Underlying Business Drive iCandy Interactive's (ASX:ICI) Lovely 432% Share Price Gain?

Simply Wall St
·3 min read

While stock picking isn't easy, for those willing to persist and learn, it is possible to buy shares in great companies, and generate wonderful returns. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. For example, iCandy Interactive Limited (ASX:ICI) has generated a beautiful 432% return in just a single year. Better yet, the share price has gained 686% in the last quarter. The longer term returns have not been as good, with the stock price only 3.1% higher than it was three years ago.

See our latest analysis for iCandy Interactive

iCandy Interactive 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. 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.

iCandy Interactive actually shrunk its revenue over the last year, with a reduction of 30%. This is in stark contrast to the splendorous stock price, which has rocketed 432% since this time a year ago. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. To us, a gain like this looks like speculation, but there might be historical trends to back it up.

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

This free interactive report on iCandy Interactive'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 iCandy Interactive rewarded shareholders with a total shareholder return of 432% over the last year. That gain actually surpasses the 1.0% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting iCandy Interactive on your watchlist. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with iCandy Interactive (at least 1 which is concerning) , and understanding them should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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@simplywallst.com.