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Over the last month the Lantronix, Inc. (NASDAQ:LTRX) has been much stronger than before, rebounding by 32%. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 48% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Lantronix
Because Lantronix made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last three years, Lantronix saw its revenue grow by 16% per year, compound. That's a fairly respectable growth rate. Shareholders have endured a share price decline of 14% per year. This implies the market had higher expectations of Lantronix. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for Lantronix in this interactive graph of future profit estimates.
A Different Perspective
While the broader market gained around 26% in the last year, Lantronix shareholders lost 31%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 1.3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Lantronix better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Lantronix , and understanding them should be part of your investment process.