While some are happy with an index fund, active investors aim to find truly magnificent investments in the stock market. When you buy and own the right business, the returns can make a huge difference to you and your family. For example, the Ferroglobe PLC The stock price (NASDAQ: GSM) has risen 931% in the past year, a fine return in just one year. On top of that, the share price rose 48% in about a quarter. This could be related to recent, recently released financial results – you can keep up to date with the most recent data by reading our corporate report. On the flip side, longer-term shareholders had a tougher race, with the stock falling 6.0% in three years. We are really delighted to see such a performance of the stock price for investors.
Given that long-term performance has been good but there has been a recent 7.6% pullback, let’s check if the fundamentals match the stock price.
See our latest review for Ferroglobe
Since Ferroglobe has not made a profit in the past twelve months, we will focus on revenue growth to get a quick view of its business development. Shareholders of unprofitable companies generally expect strong revenue growth. Some companies are ready to postpone profitability to increase their revenue faster, but in this case, good revenue growth is expected.
Ferroglobe increased its turnover by 3.3% last year. It is not a very high growth rate since it does not make a profit. So it’s really surprising that the share price has climbed 931% in just one year. We are happy that investors made money, but we cannot help but wonder if the rise is sustainable. This is one example of the huge profits that some lucky shareholders occasionally make on growth stocks.
The graph below illustrates the evolution of earnings and income over time (reveal the exact values by clicking on the image).
We are happy to report that the CEO is paid more modestly than most CEOs of companies with similar capitalization. It’s always worth keeping an eye on CEO compensation, but a bigger question is whether the company will increase profits over the years. It might be worth taking a look at our free Ferroglobe profit, revenue and cash flow report.
A different perspective
It is good to see that Ferroglobe has rewarded its shareholders with a total shareholder return of 931% over the past twelve months. This certainly beats the loss of around 1.6% per year over the past five years. We tend to place more emphasis on long-term performance than short-term performance, but the recent improvement could point to a (positive) inflection point within the company. It is always interesting to follow the evolution of stock prices over the long term. But to better understand Ferroglobe, there are many other factors that we need to take into account. To this end, you should inquire about the 3 warning signs we spotted with Ferroglobe (including 1 that should not be overlooked).
If you would rather consult with another company – one with potentially superior finances – then don’t miss this free list of companies that have proven they can increase their profits.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the US stock exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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