Firefinch's (ASX:FFX) investors will be pleased with their fantastic 443% return over the last three years
Firefinch Limited (ASX:FFX) shareholders have seen the share price descend 20% over the month. But that doesn't change the fact that the returns over the last three years have been spectacular. Indeed, the share price is up a whopping 439% in that time. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. Only time will tell if there is still too much optimism currently reflected in the share price.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for Firefinch
Firefinch isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. 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.
Firefinch's revenue trended up 130% each year over three years. That's well above most pre-profit companies. And it's not just the revenue that is taking off. The share price is up 75% per year in that time. Despite the strong run, top performers like Firefinch have been known to go on winning for decades. In fact, it might be time to put it on your watchlist, if you're not already familiar with the stock.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Firefinch
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Firefinch's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. We note that Firefinch's TSR, at 443% is higher than its share price return of 439%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It's good to see that Firefinch has rewarded shareholders with a total shareholder return of 93% in the last twelve months. That's better than the annualised return of 32% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Firefinch is showing 4 warning signs in our investment analysis , and 2 of those shouldn't be ignored...
Firefinch is not the only stock that insiders are buying. 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
