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SemiLEDs Corporation (NASDAQ:LEDS) shareholders might be rather concerned because the share price has dropped 49% in the last month. But that doesn't detract from the splendid returns of the last year. Like an eagle, the share price soared 270% in that time. 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.
Given that SemiLEDs 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
SemiLEDs actually shrunk its revenue over the last year, with a reduction of 23%. So we would not have expected the share price to rise 270%. 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).
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 SemiLEDs' earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that SemiLEDs shareholders have received a total shareholder return of 270% over one year. That's better than the annualised return of 14% 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. It's always interesting to track share price performance over the longer term. But to understand SemiLEDs better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for SemiLEDs you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.
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