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Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Futu Holdings Limited (NASDAQ:FUTU) share price has soared 159% return in just a single year. It's up an even more impressive 186% over the last quarter. Futu Holdings hasn't been listed for long, so it's still not clear if it is a long term winner.
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Futu Holdings was able to grow EPS by 87% in the last twelve months. The share price gain of 159% certainly outpaced the EPS growth. So it's fair to assume the market has a higher opinion of the business than it a year ago. This favorable sentiment is reflected in its (fairly optimistic) P/E ratio of 96.93.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Futu Holdings has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Futu Holdings will grow revenue in the future.
A Different Perspective
Futu Holdings boasts a total shareholder return of 159% for the last year. And the share price momentum remains respectable, with a gain of 186% in the last three months. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Futu Holdings you should know about.
We will like Futu Holdings 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 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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