The last three months have been tough on Pilbara Minerals Limited (ASX:PLS) shareholders, who have seen the share price decline a rather worrying 49%. But that doesn't undermine the fantastic longer term performance (measured over five years). Indeed, the share price is up a whopping 1381% in that time. Arguably, the recent fall is to be expected after such a strong rise. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price.
Anyone who held for that rewarding ride would probably be keen to talk about it.
Because Pilbara Minerals is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
For the last half decade, Pilbara Minerals can boast revenue growth at a rate of 92% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 71% per year in that time. Despite the strong run, top performers like Pilbara Minerals have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Pilbara Minerals's financial health with this free report on its balance sheet.
A Different Perspective
Pilbara Minerals shareholders are down 53% for the year, but the market itself is up 7.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 71% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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.
Of course Pilbara Minerals may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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.