Shareholders have faith in loss-making Luna Innovations (NASDAQ:LUNA) as stock climbs 11% in past week, taking five-year gain to 162%
When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. For example, the Luna Innovations Incorporated (NASDAQ:LUNA) share price has soared 162% in the last half decade. Most would be very happy with that. In more good news, the share price has risen 40% in thirty days. We note that Luna Innovations reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report.
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 Luna Innovations
Because Luna Innovations made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
For the last half decade, Luna Innovations can boast revenue growth at a rate of 21% per year. That's well above most pre-profit companies. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 21% per year, compound, during the period. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes Luna Innovations worth investigating - it may have its best days ahead.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling Luna Innovations stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that Luna Innovations shareholders have received a total shareholder return of 53% over one year. That gain is better than the annual TSR over five years, which is 21%. 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Luna Innovations (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.
But note: Luna Innovations may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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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