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Can You Imagine How Jubilant American Resources' (NASDAQ:AREC) Shareholders Feel About Its 290% Share Price Gain?

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Simply Wall St
·3 min read
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It's been a soft week for American Resources Corporation (NASDAQ:AREC) shares, which are down 16%. But that doesn't detract from the splendid returns of the last year. During that period, the share price soared a full 290%. So we think most shareholders won't be too upset about the recent fall. The real question is whether the business is trending in the right direction.

See our latest analysis for American Resources

American Resources isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong 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 year American Resources saw its revenue shrink by 72%. So we would not have expected the share price to rise 290%. It just goes to show the market doesn't always pay attention to the reported numbers. It's quite likely the revenue fall was already priced in, anyway.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

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 we recommend checking out this free report showing consensus forecasts

A Different Perspective

American Resources shareholders should be happy with the total gain of 290% over the last twelve months. A substantial portion of that gain has come in the last three months, with the stock up 63% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. It's always interesting to track share price performance over the longer term. But to understand American Resources better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for American Resources (of which 1 is potentially serious!) you should know about.

We will like American Resources 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 US exchanges.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.