It might be of some concern to shareholders to see the EMvision Medical Devices Limited (ASX:EMV) share price down 23% in the last month. But over the last year the share price has taken off like one of Elon Musk’s rockets. Indeed, the share price is up a whopping 319% in that time. So it is not that surprising to see the stock retrace a little. The real question is whether the fundamental business performance can justify the strong increase over the long term.
EMvision Medical Devices isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year EMvision Medical Devices saw its revenue grow by 13%. That’s not great considering the company is losing money. So the 319% gain in just twelve months is completely unexpected. It’s great to see that some have made big profits, but we aren’t so sure that the increase is justified. It just goes to show that big money can be made if you buy the right stock early.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
EMvision Medical Devices boasts a total shareholder return of 319% for the last year. The more recent returns haven’t been as impressive as the longer term returns, coming in at just 14%. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). It’s always interesting to track share price performance over the longer term. But to understand EMvision Medical Devices better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we’ve spotted with EMvision Medical Devices .
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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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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