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Can You Imagine How Elated Zip Co's (ASX:Z1P) Shareholders Feel About Its 352% Share Price Gain?

Simply Wall St

Investing can be hard but the potential fo an individual stock to pay off big time inspires us. But when you hold the right stock for the right time period, the rewards can be truly huge. For example, the Zip Co Limited (ASX:Z1P) share price is up a whopping 352% in the last three years, a handsome return for long term holders. On the other hand, we note it's down 8.2% in about a month.

See our latest analysis for Zip Co

Zip Co 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years Zip Co has grown its revenue at 78% annually. That's much better than most loss-making companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 65% per year, over the same period. Despite the strong run, top performers like Zip Co have been known to go on winning for decades. So we'd recommend you take a closer look at this one, or even put it on your watchlist.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

ASX:Z1P Income Statement, December 20th 2019

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So it makes a lot of sense to check out what analysts think Zip Co will earn in the future (free profit forecasts).

A Different Perspective

We're pleased to report that Zip Co rewarded shareholders with a total shareholder return of 247% over the last year. That's better than the annualized TSR of 65% over the last three years. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. 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.

We will like Zip Co better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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.