Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. To wit, the ReadyTech Holdings Limited (ASX:RDY) share price is 76% higher than it was a year ago, much better than the market return of around 13% (not including dividends) in the same period. So that should have shareholders smiling. ReadyTech Holdings hasn't been listed for long, so it's still not clear if it is a long term winner.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for ReadyTech Holdings

Given that ReadyTech Holdings only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last year ReadyTech Holdings saw its revenue grow by 27%. That's a fairly respectable growth rate. While the share price performed well, gaining 76% 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).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

ReadyTech Holdings boasts a total shareholder return of 76% for the last year. A substantial portion of that gain has come in the last three months, with the stock up 17% in that time. This suggests the company is continuing to win over new investors. It's always interesting to track share price performance over the longer term. But to understand ReadyTech Holdings better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for ReadyTech Holdings you should be aware of.

ReadyTech Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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