The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the Matrix Service Company (NASDAQ:MTRX) share price has flown 113% in the last three years. That sort of return is as solid as granite. It's also up 13% in about a month.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
See our latest analysis for Matrix Service
Matrix Service isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good 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.
Over the last three years Matrix Service has grown its revenue at 3.3% annually. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In contrast, the stock has popped 29% per year in that time - an impressive result. Shareholders should be pretty happy with that, although interested investors might want to examine the financial data more closely to see if the gains are really justified. It may be that the market is pretty optimistic about Matrix Service if you look to the bottom line.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Matrix Service's 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 Matrix Service has rewarded shareholders with a total shareholder return of 50% in the last twelve months. That gain is better than the annual TSR over five years, which is 0.9%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Matrix Service it might be wise to click here to see if insiders have been buying or selling shares.
But note: Matrix Service 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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