- Oops!Something went wrong.Please try again later.
The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. One great example is PTC Inc. (NASDAQ:PTC) which saw its share price drive 142% higher over five years. Then again, the 9.7% share price decline hasn't been so fun for shareholders. This could be related to the soft market, with stocks down around 4.6% in the last month.
While PTC 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. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 5 years PTC saw its revenue grow at 2.0% per year. Put simply, that growth rate fails to impress. In comparison, the share price rise of 19% per year over the last half a decade is pretty impressive. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. It may be that the market is pretty optimistic about PTC.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
PTC is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for PTC in this interactive graph of future profit estimates.
A Different Perspective
It's nice to see that PTC shareholders have received a total shareholder return of 25% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 19% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with PTC , and understanding them should be part of your investment process.
We will like PTC better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.