Some Cresco Labs Inc. (CNSX:CL) shareholders are probably rather concerned to see the share price fall 40% over the last three months. But looking back over the last year, the returns have actually been rather pleasing! Looking at the full year, the company has easily bested an index fund by gaining 23%.
Cresco Labs 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. 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.
In the last year Cresco Labs saw its revenue grow by 257%. That's stonking growth even when compared to other loss-making stocks. While the share price gain of 23% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Cresco Labs. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So it makes a lot of sense to check out what analysts think Cresco Labs will earn in the future (free profit forecasts).
A Different Perspective
Cresco Labs shareholders should be happy with the total gain of 23% over the last twelve months. Unfortunately the share price is down 40% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. 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.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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