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Is Identiv’s Share Price Gain Of 154% Well Earned?

Simply Wall St

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. To wit, the Identiv, Inc. (NASDAQ:INVE) share price has flown 154% in the last three years. How nice for those who held the stock! On top of that, the share price is up 16% in about a quarter.

Check out our latest analysis for Identiv

Identiv isn’t a profitable company, so 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. When a company doesn’t make profits, we’d generally expect to see good 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.

Identiv’s revenue trended up 4.3% each year over three years. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In contrast, the stock has popped 36% per year in that time – an impressive result. We’d need to take a closer look at the revenue and profit trends to see whether the improvements might justify that sort of increase. It seems likely that the market is pretty optimistic about Identiv, given it is losing money.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

NasdaqCM:INVE Income Statement, March 7th 2019

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. This free report showing analyst forecasts should help you form a view on Identiv

A Different Perspective

We’re pleased to report that Identiv shareholders have received a total shareholder return of 53% over one year. Notably the five-year annualised TSR loss of 8.5% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.

Identiv 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 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 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. Thank you for reading.