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Does Harmonic's (NASDAQ:HLIT) Share Price Gain of 72% Match Its Business Performance?

Simply Wall St

The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. For example, the Harmonic Inc. (NASDAQ:HLIT) share price is up 72% in the last year, clearly besting the market return of around 33% (not including dividends). So that should have shareholders smiling. Looking back further, the stock price is 53% higher than it was three years ago.

View our latest analysis for Harmonic

Harmonic 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.

In the last year Harmonic saw its revenue grow by 0.9%. That's not great considering the company is losing money. The modest growth is probably largely reflected in the share price, which is up 72%. While not a huge gain tht seems pretty reasonable. It could be worth keeping an eye on this one, especially if growth accelerates.

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

NasdaqGS:HLIT Income Statement, December 22nd 2019

If you are thinking of buying or selling Harmonic stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Harmonic shareholders have received a total shareholder return of 72% over the last year. That's better than the annualised return of 1.7% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. If you would like to research Harmonic in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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