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Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Rafael Holdings, Inc. (NYSEMKT:RFL) share price has soared 155% in the last year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 103% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. We'll need to follow Rafael Holdings for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Rafael Holdings isn't a profitable company, so 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. 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 Rafael Holdings saw its revenue grow by 1.9%. That's not a very high growth rate considering it doesn't make profits. In contrast, the share price took off during the year, gaining 155%. We're happy that investors have made money, though we wonder if the increase will be sustained. We're not so sure that revenue growth is driving the market optimism about the stock.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. Dive deeper into the earnings by checking this interactive graph of Rafael Holdings's earnings, revenue and cash flow.
A Different Perspective
Rafael Holdings shareholders should be happy with the total gain of 155% over the last twelve months. And the share price momentum remains respectable, with a gain of 103% in the last three months. 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. You could get a better understanding of Rafael Holdings's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.