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Does Compagnie Financière de Neufcour's (EBR:NEU) Share Price Gain of 31% Match Its Business Performance?

Simply Wall St

The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Compagnie Financière de Neufcour S.A. (EBR:NEU) share price is up 31% in the last year, clearly besting the market return of around 21% (not including dividends). That's a solid performance by our standards! Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.

See our latest analysis for Compagnie Financière de Neufcour

We don't think that Compagnie Financière de Neufcour's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year Compagnie Financière de Neufcour saw its revenue grow by 140%. That's a head and shoulders above most loss-making companies. The solid 31% share price gain goes down pretty well, but it's not necessarily as good as you might expect given the top notch revenue growth. If that's the case, now might be the time to take a close look at Compagnie Financière de Neufcour. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

ENXTBR:NEU Income Statement, December 22nd 2019

This free interactive report on Compagnie Financière de Neufcour's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Compagnie Financière de Neufcour shareholders should be happy with the total gain of 31% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 10% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

We will like Compagnie Financière de Neufcour better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BE exchanges.

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.

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. Thank you for reading.