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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 Microvast Holdings, Inc. (NASDAQ:MVST) share price is 75% higher than it was a year ago, much better than the market return of around 25% (not including dividends) in the same period. So that should have shareholders smiling. Zooming out, the stock is actually down 57% in the last three years.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
See our latest analysis for Microvast Holdings
Microvast Holdings wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.
Microvast Holdings grew its revenue by 39% last year. We respect that sort of growth, no doubt. While the share price performed well, gaining 75% over twelve months, you could argue the revenue growth warranted it. If the company can maintain the revenue growth, the share price could go higher still. But it's crucial to check profitability and cash flow before forming a view on the 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 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. You can see what analysts are predicting for Microvast Holdings in this interactive graph of future profit estimates.
A Different Perspective
It's nice to see that Microvast Holdings shareholders have received a total shareholder return of 75% over the last year. There's no doubt those recent returns are much better than the TSR loss of 12% per year over five years. 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. It's always interesting to track share price performance over the longer term. But to understand Microvast Holdings better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we've spotted with Microvast Holdings (including 2 which are a bit unpleasant) .