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Long term investing can be life changing when you buy and hold the truly great businesses. And we've seen some truly amazing gains over the years. Just think about the savvy investors who held PolyNovo Limited (ASX:PNV) shares for the last five years, while they gained 2422%. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 41% over the last quarter.
It really delights us to see such great share price performance for investors.
View our latest analysis for PolyNovo
PolyNovo isn't a profitable company, so 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 5 years PolyNovo saw its revenue grow at 58% per year. Even measured against other revenue-focussed companies, that's a good result. Fortunately, the market has not missed this, and has pushed the share price up by 91% per year in that time. It's never too late to start following a top notch stock like PolyNovo, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.
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. So it makes a lot of sense to check out what analysts think PolyNovo will earn in the future (free profit forecasts).
A Different Perspective
It's good to see that PolyNovo has rewarded shareholders with a total shareholder return of 303% in the last twelve months. That gain is better than the annual TSR over five years, which is 91%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on PolyNovo it might be wise to click here to see if insiders have been buying or selling shares.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.