PayGroup (ASX:PYG) shareholder returns have been strong, earning 104% in 1 year
Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example PayGroup Limited (ASX:PYG). Its share price is already up an impressive 104% in the last twelve months. And shareholders are doubtless smiling after an even more impressive share price rise of 161% in thirty days. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report. The longer term returns have not been as good, with the stock price only 23% higher than it was three years ago.
The past week has proven to be lucrative for PayGroup investors, so let's see if fundamentals drove the company's one-year performance.
Check out our latest analysis for PayGroup
While PayGroup made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. 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 year PayGroup saw its revenue grow by 68%. That's well above most other pre-profit companies. And the share price has responded, gaining 104% as we previously mentioned. It's great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It is of course excellent to see how PayGroup has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It's nice to see that PayGroup shareholders have gained 104% (in total) over the last year. That's better than the annualized TSR of 7% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting PayGroup on your watchlist. It's always interesting to track share price performance over the longer term. But to understand PayGroup better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with PayGroup (including 1 which is significant) .
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 AU 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.
