U.S. Markets closed
  • S&P 500

    3,647.29
    -7.75 (-0.21%)
     
  • Dow 30

    29,134.99
    -125.82 (-0.43%)
     
  • Nasdaq

    10,829.50
    +26.58 (+0.25%)
     
  • Russell 2000

    1,662.51
    +6.63 (+0.40%)
     
  • Crude Oil

    78.19
    -0.31 (-0.39%)
     
  • Gold

    1,636.60
    +0.40 (+0.02%)
     
  • Silver

    18.36
    +0.02 (+0.13%)
     
  • EUR/USD

    0.9590
    -0.0021 (-0.2206%)
     
  • 10-Yr Bond

    3.9640
    +0.0860 (+2.22%)
     
  • Vix

    32.60
    +0.34 (+1.05%)
     
  • GBP/USD

    1.0723
    +0.0040 (+0.3732%)
     
  • USD/JPY

    144.7770
    +0.0970 (+0.0670%)
     
  • BTC-USD

    19,066.41
    -79.88 (-0.42%)
     
  • CMC Crypto 200

    436.57
    -22.57 (-4.92%)
     
  • FTSE 100

    6,984.59
    -36.36 (-0.52%)
     
  • Nikkei 225

    26,571.87
    +140.32 (+0.53%)
     

Did The Underlying Business Drive R1 RCM's (NASDAQ:RCM) Lovely 602% Share Price Gain?

·3 min read

We think all investors should try to buy and hold high quality multi-year winners. While the best companies are hard to find, but they can generate massive returns over long periods. Don't believe it? Then look at the R1 RCM Inc. (NASDAQ:RCM) share price. It's 602% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 34% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 14% in 90 days).

It really delights us to see such great share price performance for investors.

Check out our latest analysis for R1 RCM

Given that R1 RCM only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

For the last half decade, R1 RCM can boast revenue growth at a rate of 33% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 48% per year in that time. It's never too late to start following a top notch stock like R1 RCM, since some long term winners go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

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. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on R1 RCM

A Different Perspective

We're pleased to report that R1 RCM shareholders have received a total shareholder return of 70% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 48% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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 instance, we've identified 4 warning signs for R1 RCM that you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are 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@simplywallst.com.