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It's always best to build a diverse portfolio of shares, since any stock business could lag the broader market. But the goal is to pick stocks that do better than average. One such company is TAT Technologies Ltd. (NASDAQ:TATT), which saw its share price increase 91% in the last year, slightly above the market return of around 79% (not including dividends). Unfortunately the longer term returns are not so good, with the stock falling 43% in the last three years.
Because TAT Technologies 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year TAT Technologies saw its revenue shrink by 7.4%. Despite the lack of revenue growth, the stock has returned a solid 91% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on TAT Technologies' 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 TAT Technologies has rewarded shareholders with a total shareholder return of 91% in the last twelve months. That certainly beats the loss of about 2% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. Case in point: We've spotted 2 warning signs for TAT Technologies you should be aware of, and 1 of them is a bit unpleasant.
If you are like me, then you will not want to miss this free list of growing companies that insiders are 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.
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