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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example Metro Bank Holdings PLC (LON:MTRO). Its share price is already up an impressive 232% in the last twelve months. It's also good to see the share price up 24% over the last quarter. However, the stock hasn't done so well in the longer term, with the stock only up 1.0% in three years.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Check out our latest analysis for Metro Bank Holdings
Metro Bank Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
Metro Bank Holdings grew its revenue by 5.6% last year. That's not a very high growth rate considering it doesn't make profits. In contrast, the share price took off during the year, gaining 232%. We're happy that investors have made money, though we wonder if the increase will be sustained. We're not so sure that revenue growth is driving the market optimism about the stock.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
It's nice to see that Metro Bank Holdings shareholders have received a total shareholder return of 232% over the last year. There's no doubt those recent returns are much better than the TSR loss of 8% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Metro Bank Holdings better, we need to consider many other factors. Even so, be aware that Metro Bank Holdings is showing 1 warning sign in our investment analysis , you should know about...
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.