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When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Amplify Energy Corp. (NYSE:AMPY) share price has soared 235% return in just a single year. It's also good to see the share price up 38% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
Check out our latest analysis for Amplify Energy
Because Amplify Energy 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last year Amplify Energy saw its revenue grow by 7.2%. That's not great considering the company is losing money. In contrast, the share price took off during the year, gaining 235%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting that the CEO is paid less than the median at similar sized 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. If you are thinking of buying or selling Amplify Energy stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
It's nice to see that Amplify Energy shareholders have gained 235% over the last year. That's better than the more recent three month gain of 38%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). 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. For instance, we've identified 2 warning signs for Amplify Energy (1 is a bit unpleasant) that you should be aware of.