Rambus (NASDAQ:RMBS) shareholder returns have been fantastic, earning 397% in 5 years
We think all investors should try to buy and hold high quality multi-year winners. And highest quality companies can see their share prices grow by huge amounts. Don't believe it? Then look at the Rambus Inc. (NASDAQ:RMBS) share price. It's 397% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. On top of that, the share price is up 29% in about a quarter. But this could be related to the strong market, which is up 13% in the last three months.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
View our latest analysis for Rambus
Given that Rambus only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. 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.
For the last half decade, Rambus can boast revenue growth at a rate of 12% per year. That's a pretty good long term growth rate. However, the share price gain of 38% during the period is considerably stronger. It might not be cheap but a (long-term) growth stock like this is usually well worth taking a closer look at.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We know that Rambus has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Rambus' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that Rambus has rewarded shareholders with a total shareholder return of 148% in the last twelve months. That gain is better than the annual TSR over five years, which is 38%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Rambus better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Rambus you should know about.
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 American 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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