Nine Energy Service (NYSE: NINE) Shareholders Benefit From Impressive 107% Share Price Gain
Unless you borrow money to invest, the potential losses are limited. On the flip side, if you find a high quality business to buy (at the right price), you can more than double your money! For example, the New Energy Service, Inc. (NYSE: NEW) the share price had more than doubled in just one year, up 107%. The 37% gain recorded over the past three months also pleased shareholders. Unfortunately, long-term returns aren’t that good, with the stock falling 89% in the past three years.
Nine Energy Service is currently unprofitable, so most analysts would look to revenue growth to get a sense of how fast the underlying business is growing. When a business is not making a profit, we generally expect good revenue growth. As you can imagine, rapid revenue growth, when sustained, often leads to rapid profit growth.
Last year, Nine Energy Service saw its turnover decline by 69%. So we didn’t expect the stock price to rise 107%. It just shows that the market doesn’t always pay attention to the reported numbers. Of course, the market might expect this drop in revenue.
The image below shows how revenue and income have tracked over time (if you click on the image you can see more details).
This free interactive report on Nine Energy Service balance sheet strength is a great place to start if you want to dig deeper into your stock research.
A different perspective
Fortunately, the total return to shareholders of Nine Energy Service last year was 107%. What is absolutely clear is that this is far better than the dismal 24% annual average. loss suffered in the past three years. It may well be that the company has recovered, or that it has regained investor confidence. I find it very interesting to look at the long-term share price as an indicator of company performance. But to really get an overview, we have to take other information into account as well. Like risks, for example. Every business has them, and we’ve spotted 4 warning signs for Nine Energy Service (of which 1 is of concern!) that you should know about.
Of course Nine Energy Service may not be the best stock to buy. So you might want to see this free collection of growth stocks.
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently traded on the US stock exchanges.
This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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