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If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Franklin Wireless Corp. (NASDAQ:FKWL) share price is 55% higher than it was a year ago, much better than the market return of around 7.7% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Also impressive, the stock is up 40% over three years, making long term shareholders happy, too.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
Our free stock report includes 2 warning signs investors should be aware of before investing in Franklin Wireless. Read for free now.
Given that Franklin Wireless didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Franklin Wireless actually shrunk its revenue over the last year, with a reduction of 8.3%. Despite the lack of revenue growth, the stock has returned a solid 55% the last twelve months. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Franklin Wireless' financial health with this free report on its balance sheet.
A Different Perspective
We're pleased to report that Franklin Wireless shareholders have received a total shareholder return of 55% over one year. Notably the five-year annualised TSR loss of 3% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. To that end, you should learn about the 2 warning signs we've spotted with Franklin Wireless (including 1 which can't be ignored) .