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OrthoPediatrics Corp. (NASDAQ:KIDS) shareholders might be concerned after seeing the share price drop 12% in the last month. In contrast, the return over three years has been impressive. The share price marched upwards over that time, and is now 156% higher than it was. To some, the recent share price pullback wouldn't be surprising after such a good run. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.
Check out our latest analysis for OrthoPediatrics
OrthoPediatrics 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
OrthoPediatrics' revenue trended up 16% each year over three years. That's pretty nice growth. It's fair to say that the market has acknowledged the growth by pushing the share price up 37% per year. The business has made good progress on the top line, but the market is extrapolating the growth. Some investors like to buy in just after a company becomes profitable, since that can be a powerful inflexion point.
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. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
Over the last year OrthoPediatrics shareholders have received a TSR of 27%. Unfortunately this falls short of the market return of around 60%. But the (superior) three-year TSR of 37% per year is some consolation. Even the best companies don't see strong share price performance every year. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for OrthoPediatrics you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.