Investors bid Data Storage (NASDAQ:DTST) up US$7.5m despite increasing losses YoY, taking one-year return to 356%
While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. While not every stock performs well, when investors win, they can win big. For example, Data Storage Corporation (NASDAQ:DTST) has generated a beautiful 356% return in just a single year. Also pleasing for shareholders was the 163% gain in the last three months. Zooming out, the stock is actually down 14% in the last three years.
Since it's been a strong week for Data Storage shareholders, let's have a look at trend of the longer term fundamentals.
See our latest analysis for Data Storage
Because Data Storage made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. 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.
In the last year Data Storage saw its revenue grow by 8.4%. That's not a very high growth rate considering it doesn't make profits. So the 356% gain in just twelve months is completely unexpected. We're happy that investors have made money, but we can't help questioning whether the rise is sustainable. It just goes to show that big money can be made if you buy the right stock early.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized 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 Data Storage's earnings, revenue and cash flow.
A Different Perspective
It's good to see that Data Storage has rewarded shareholders with a total shareholder return of 356% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Data Storage has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.
But note: Data Storage 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 American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
