Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the PDC Energy, Inc. (NASDAQ:PDCE) share price had more than doubled in just one year - up 192%. It's also good to see the share price up 31% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. Also impressive, the stock is up 56% over three years, making long term shareholders happy, too.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
Check out our latest analysis for PDC Energy
We don't think that PDC Energy's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
PDC Energy grew its revenue by 77% last year. That's well above most other pre-profit companies. And the share price has responded, gaining 192% as we previously mentioned. It's great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We know that PDC Energy has improved its bottom line lately, but what does the future have in store? So it makes a lot of sense to check out what analysts think PDC Energy will earn in the future (free profit forecasts).
A Different Perspective
We're pleased to report that PDC Energy shareholders have received a total shareholder return of 194% over one year. That's including the dividend. There's no doubt those recent returns are much better than the TSR loss of 5% 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 PDC Energy better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with PDC Energy (at least 1 which is significant) , and understanding them should be part of your investment process.