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Can You Imagine How Chuffed Cokal's (ASX:CKA) Shareholders Feel About Its 153% Share Price Gain?

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. For example, the Cokal Limited (ASX:CKA) share price has soared 153% in the last three years. That sort of return is as solid as granite. We note the stock price is up 2.1% in the last seven days.

View our latest analysis for Cokal

Cokal 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years Cokal saw its revenue grow at 107% per year. That's well above most pre-profit companies. Along the way, the share price gained 36% per year, a solid pop by our standards. But it does seem like the market is paying attention to strong revenue growth. That's not to say we think the share price is too high. In fact, it might be worth keeping an eye on this one.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

ASX:CKA Income Statement, January 1st 2020

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We're pleased to report that Cokal shareholders have received a total shareholder return of 30% over one year. Notably the five-year annualised TSR loss of 8.5% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.

But note: Cokal may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

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.

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. Thank you for reading.