It hasn’t been the best quarter for SMTC Corporation (NASDAQ:SMTX) shareholders, since the share price has fallen 21% in that time. In contrast, the return over three years has been impressive. In three years the stock price has launched 137% higher: a great result. After a run like that some may not be surprised to see prices moderate. The thing to consider is whether the underlying business is doing well enough to support the current price.
See our latest analysis for SMTC
Given that SMTC 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. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
SMTC’s revenue trended up 37% each year over three years. That’s well above most pre-profit companies. Along the way, the share price gained 33% per year, a solid pop by our standards. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we’d say SMTC is still worth investigating – successful businesses can often keep growing for long periods.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
NasdaqGM:SMTX Income Statement April 29th 2020
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think SMTC will earn in the future (free profit forecasts).
A Different Perspective
We regret to report that SMTC shareholders are down 16% for the year. Unfortunately, that’s worse than the broader market decline of 1.5%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. On the bright side, long term shareholders have made money, with a gain of 12% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we’ve discovered 3 warning signs for SMTC that you should be aware of before investing here.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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