Does Wrap Technologies' (NASDAQ:WRAP) Share Price Gain of 32% Match Its Business Performance?
We believe investing is smart because history shows that stock markets go higher in the long term. But if when you choose to buy stocks, some of them will be below average performers. For example, the Wrap Technologies, Inc. (NASDAQ:WRAP), share price is up over the last year, but its gain of 32% trails the market return. Wrap Technologies hasn't been listed for long, so it's still not clear if it is a long term winner.
See our latest analysis for Wrap Technologies
Wrap Technologies 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. 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.
Over the last twelve months, Wrap Technologies' revenue grew by 278%. That's stonking growth even when compared to other loss-making stocks. To be blunt the 32% is underwhelming given the strong revenue growth. When revenue spikes but the share price doesn't we can't help wondering if the market is missing something. It's possible that the market is worried about the losses, or simply that the growth was already priced in. Or, this could be worth adding to your watchlist.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
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. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
Wrap Technologies shareholders have gained 32% for the year. While it's always nice to make a profit on the stock market, we do note that the TSR was no better than the broader market return of about 58%. That's a lot better than the more recent three month gain of 5.9%, implying that share price has plateaued recently, for now. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It's always interesting to track share price performance over the longer term. But to understand Wrap Technologies better, we need to consider many other factors. For instance, we've identified 3 warning signs for Wrap Technologies (1 doesn't sit too well with us) 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.
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