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We believe investing is smart because history shows that stock markets go higher in the long term. But if you choose that path, you're going to buy some stocks that fall short of the market. For example, the Coupang, Inc. (NYSE:CPNG), share price is up over the last year, but its gain of 11% trails the market return. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
Since the stock has added US$1.6b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Check out our latest analysis for Coupang
We don't think that Coupang's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last year Coupang saw its revenue grow by 10%. That's not great considering the company is losing money. Over that time the share price gained a very modest 11%. A closer look at the bottom line might reveal an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
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. This free report showing analyst forecasts should help you form a view on Coupang
A Different Perspective
Coupang shareholders have gained 11% for the year. Unfortunately this falls short of the market return of around 17%. It's always interesting to track share price performance over the longer term. But to understand Coupang better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Coupang you should be aware of.
We will like Coupang better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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