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Kirkland's, Inc. (NASDAQ:KIRK) shareholders might be concerned after seeing the share price drop 25% in the last week. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. Indeed, the share price is up a whopping 417% in that time. So the recent fall isn't enough to negate the good performance. While winners often keep winning, it can pay to be cautious after a strong rise.
Given that Kirkland's 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Kirkland's actually shrunk its revenue over the last year, with a reduction of 13%. This is in stark contrast to the splendorous stock price, which has rocketed 417% since this time a year ago. It's pretty clear the market isn't basing its valuation on fundamental metrics like revenue. While this gain looks like speculative buying to us, sometimes speculation pays off.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on Kirkland's' earnings, revenue and cash flow.
A Different Perspective
We're pleased to report that Kirkland's shareholders have received a total shareholder return of 417% over one year. There's no doubt those recent returns are much better than the TSR loss of 11% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with Kirkland's (including 2 which is are a bit concerning) .
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.
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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