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Is U.S. Auto Parts Network's (NASDAQ:PRTS) 118% Share Price Increase Well Justified?

Simply Wall St

Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) share price had more than doubled in just one year - up 118%. It's also good to see the share price up 49% over the last quarter. Unfortunately the longer term returns are not so good, with the stock falling 35% in the last three years.

See our latest analysis for U.S. Auto Parts Network

U.S. Auto Parts Network wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

U.S. Auto Parts Network actually shrunk its revenue over the last year, with a reduction of 3.8%. We're a little surprised to see the share price pop 118% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

NasdaqGS:PRTS Income Statement, January 8th 2020

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. You can see what analysts are predicting for U.S. Auto Parts Network in this interactive graph of future profit estimates.

A Different Perspective

We're pleased to report that U.S. Auto Parts Network shareholders have received a total shareholder return of 118% over one year. That gain is better than the annual TSR over five years, which is 0.3%. 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. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.

U.S. Auto Parts Network 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 US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.

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. Thank you for reading.