Luna Innovations' (NASDAQ:LUNA) growing losses don't faze investors as the stock soars 15% this past week
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of Luna Innovations Incorporated (NASDAQ:LUNA) stock is up an impressive 272% over the last five years. On top of that, the share price is up 92% in about a quarter.
The past week has proven to be lucrative for Luna Innovations investors, so let's see if fundamentals drove the company's five-year performance.
See our latest analysis for Luna Innovations
Luna Innovations wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
For the last half decade, Luna Innovations can boast revenue growth at a rate of 21% per year. Even measured against other revenue-focussed companies, that's a good result. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 30% per year, compound, during the period. So it seems likely that buyers have paid attention to the strong revenue growth. To our minds that makes Luna Innovations worth investigating - it may have its best days ahead.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free report showing analyst forecasts should help you form a view on Luna Innovations
A Different Perspective
We're pleased to report that Luna Innovations shareholders have received a total shareholder return of 10% over one year. Having said that, the five-year TSR of 30% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Luna Innovations better, we need to consider many other factors. Even so, be aware that Luna Innovations is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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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