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Unfortunately, investing is risky - companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Baylin Technologies Inc. (TSE:BYL) share price had more than doubled in just one year - up 148%. On top of that, the share price is up 138% in about a quarter. Unfortunately the longer term returns are not so good, with the stock falling 27% in the last three years.
Since the stock has added CA$20m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Check out our latest analysis for Baylin Technologies
Given that Baylin Technologies didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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 year Baylin Technologies saw its revenue grow by 31%. That's a fairly respectable growth rate. The revenue growth is decent but the share price had an even better year, gaining 148%. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Baylin Technologies in this interactive graph of future profit estimates.
A Different Perspective
It's nice to see that Baylin Technologies shareholders have received a total shareholder return of 148% 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 Baylin Technologies better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Baylin Technologies (at least 3 which are concerning) , and understanding them should be part of your investment process.