Does Vonex's (ASX:VN8) Share Price Gain of 26% Match Its Business Performance?
Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Vonex Limited (ASX:VN8) share price is up 26% in the last year, clearly besting the market return of around 19% (not including dividends). That's a solid performance by our standards! Vonex hasn't been listed for long, so it's still not clear if it is a long term winner.
See our latest analysis for Vonex
Given that Vonex didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last twelve months, Vonex's revenue grew by 9.1%. That's not a very high growth rate considering it doesn't make profits. In keeping with the revenue growth, the share price gained 26% in that time. 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 below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
With a TSR of 26% over the last year, Vonex shareholders would be reasonably content, given that's not far from the broader market return of 25%. It's always interesting to track share price performance over the longer term. But to understand Vonex better, we need to consider many other factors. Take risks, for example - Vonex has 5 warning signs (and 2 which are potentially serious) we think you should know about.
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 AU 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.
