Rocket Companies (NYSE:RKT) rises 8.4% this week, taking one-year gains to 15%
A diverse portfolio of stocks will always have winners and losers. Of course, the aim of the game is to pick stocks that do better than an index fund. Rocket Companies, Inc. (NYSE:RKT) has done well over the last year, with the stock price up 15% beating the market return of 14% (not including dividends). Rocket Companies hasn't been listed for long, so it's still not clear if it is a long term winner.
Since the stock has added US$99m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Check out our latest analysis for Rocket Companies
Rocket Companies isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
In the last year Rocket Companies saw its revenue shrink by 65%. Despite the lack of revenue growth, the stock has returned a solid 15% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Rocket Companies will earn in the future (free profit forecasts).
A Different Perspective
Rocket Companies shareholders have gained 15% for the year (even including dividends). The bad news is that's no better than the average market return, which was roughly 16%. It's always interesting to track share price performance over the longer term. But to understand Rocket Companies better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Rocket Companies you should be aware of, and 1 of them can't be ignored.
Rocket Companies is not the only stock that insiders are buying. 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 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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