Iridium Communications' (NASDAQ:IRDM) investors will be pleased with their fantastic 318% return over the last five years
For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. For example, the Iridium Communications Inc. (NASDAQ:IRDM) share price is up a whopping 318% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
View our latest analysis for Iridium Communications
We don't think that Iridium Communications' modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last 5 years Iridium Communications saw its revenue grow at 7.4% per year. That's a fairly respectable growth rate. However, the share price gain of 33% during the period is considerably stronger. We usually like strong growth stocks but it does seem the market already appreciates this one quite well!
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 know that Iridium Communications has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Iridium Communications' 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 Iridium Communications shareholders have received a total shareholder return of 26% over the last year. Of course, that includes the dividend. However, the TSR over five years, coming in at 33% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand Iridium Communications better, we need to consider many other factors. Take risks, for example - Iridium Communications has 1 warning sign we think you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
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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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