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Can You Imagine How Jubilant Universal Biosensors' (ASX:UBI) Shareholders Feel About Its 165% Share Price Gain?

Simply Wall St
·3 min read

Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Universal Biosensors, Inc. (ASX:UBI) share price has soared 165% in the last year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 78% over the last quarter. Also impressive, the stock is up 66% over three years, making long term shareholders happy, too.

View our latest analysis for Universal Biosensors

Given that Universal Biosensors didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

In the last year Universal Biosensors saw its revenue shrink by 79%. So we would not have expected the share price to rise 165%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

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

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

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's good to see that Universal Biosensors has rewarded shareholders with a total shareholder return of 165% in the last twelve months. That's better than the annualised return of 1.5% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Universal Biosensors that you should be aware of.

But note: Universal Biosensors 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.

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.