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Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) shareholders have seen the share price descend 25% over the month. But that doesn't change the fact that shareholders have received really good returns over the last five years. It's fair to say most would be happy with 195% the gain in that time. To some, the recent pullback wouldn't be surprising after such a fast rise. Only time will tell if there is still too much optimism currently reflected in the share price.
While the stock has fallen 8.7% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
See our latest analysis for Grid Dynamics Holdings
While Grid Dynamics Holdings made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. 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 5 years Grid Dynamics Holdings saw its revenue grow at 24% per year. That's well above most pre-profit companies. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 24% per year, in that time. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes Grid Dynamics Holdings worth investigating - it may have its best days ahead.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It is of course excellent to see how Grid Dynamics Holdings has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Grid Dynamics Holdings' financial health with this free report on its balance sheet.
A Different Perspective
It's good to see that Grid Dynamics Holdings has rewarded shareholders with a total shareholder return of 34% in the last twelve months. That gain is better than the annual TSR over five years, which is 24%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Grid Dynamics Holdings better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Grid Dynamics Holdings you should be aware of.