It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But when you pick a company that is really flourishing, you can make more than 100%. For instance the CPI Computer Peripherals International (ATH:CPI) share price is 147% higher than it was three years ago. Most would be happy with that. In more good news, the share price has risen -7.3% in thirty days. But the price may well have benefitted from a buoyant market, since stocks have gained 5.5% in the last thirty days.
Given that CPI Computer Peripherals International didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. 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.
CPI Computer Peripherals International’s revenue trended up 1.4% each year over three years. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In comparison, the share price rise of 35% per year over the last three years is pretty impressive. We’d need to take a closer look at the revenue and profit trends to see whether the improvements might justify that sort of increase. It seems likely that the market is pretty optimistic about CPI Computer Peripherals International, given it is losing money.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
The total return of 17% received by CPI Computer Peripherals International shareholders over the last year isn’t far from the market return of -17%. The silver lining is that longer term investors would have made a total return of 2.1% per year over half a decade. If the stock price has been impacted by changing sentiment, rather than deteriorating business conditions, it could spell opportunity. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
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 GR exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.