Lantronix, Inc. (NASDAQ:LTRX) shareholders have seen the share price descend 28% over the month. Looking further back, the stock has generated good profits over five years. Its return of 94% has certainly bested the market return!
Although Lantronix has shed US$21m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
Lantronix isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
For the last half decade, Lantronix can boast revenue growth at a rate of 21% per year. Even measured against other revenue-focussed companies, that's a good result. While the compound gain of 14% per year is good, it's not unreasonable given the strong revenue growth. If the strong revenue growth continues, we'd expect the share price to follow, in time. Of course, you'll have to research the business more fully to figure out if this is an attractive opportunity.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Lantronix stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Lantronix shareholders are down 22% over twelve months, which isn't far from the market return of -22%. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. It's always interesting to track share price performance over the longer term. But to understand Lantronix better, we need to consider many other factors. Take risks, for example - Lantronix has 2 warning signs we think you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
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