Unfortunately, investing is risky - companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example EDAP TMS S.A. (NASDAQ:EDAP). Its share price is already up an impressive 117% in the last twelve months. It's also good to see the share price up 74% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. It is also impressive that the stock is up 44% over three years, adding to the sense that it is a real winner.
Because EDAP TMS 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
EDAP TMS grew its revenue by 9.7% last year. That's not great considering the company is losing money. So we wouldn't have expected the share price to rise by 117%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
This free interactive report on EDAP TMS's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that EDAP TMS shareholders have received a total shareholder return of 117% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 8.9% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
We will like EDAP TMS 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.
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 firstname.lastname@example.org. 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.