U.S. Markets closed

Does Agilysys's (NASDAQ:AGYS) Share Price Gain of 83% Match Its Business Performance?

Simply Wall St

By buying an index fund, you can roughly match the market return with ease. But if you pick the right individual stocks, you could make more than that. For example, the Agilysys, Inc. (NASDAQ:AGYS) share price is up 83% in the last three years, clearly besting than the market return of around 38% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 59%.

View our latest analysis for Agilysys

Because Agilysys is loss-making, 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. 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.

In the last 3 years Agilysys saw its revenue grow at 3.1% per year. Considering the company is losing money, we think that rate of revenue growth is uninspiring. The modest growth is probably broadly reflected in the share price, which is up 22%, per year over 3 years. The real question is when the business will generate profits, and how quickly they will grow. Given the market doesn't seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.

You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).

NasdaqGS:AGYS Income Statement, April 17th 2019

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of buying or selling Agilysys stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

We're pleased to report that Agilysys shareholders have received a total shareholder return of 59% over one year. That gain is better than the annual TSR over five years, which is 9.5%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Agilysys by clicking this link.

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.

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 editorial-team@simplywallst.com. 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.