Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. To wit, the Goosehead Insurance, Inc (NASDAQ:GSHD) share price is 98% higher than it was a year ago, much better than the market return of around 9.4% (not including dividends) in the same period. That's a solid performance by our standards! Goosehead Insurance hasn't been listed for long, so it's still not clear if it is a long term winner.
Given that Goosehead Insurance 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last twelve months, Goosehead Insurance's revenue grew by 41%. That's a fairly respectable growth rate. While the share price performed well, gaining 98% over twelve months, you could argue the revenue growth warranted it. If the company can maintain the revenue growth, the share price could go higher still. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
What about the Total Shareholder Return (TSR)?
We'd be remiss not to mention the difference between Goosehead Insurance's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Goosehead Insurance hasn't been paying dividends, but its TSR of 101% exceeds its share price return of 98%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.
A Different Perspective
It's nice to see that Goosehead Insurance shareholders have gained 101% over the last year. The more recent returns haven't been as impressive as the longer term returns, coming in at just 5.1%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
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.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.