The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. 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 GTY Technology Holdings Inc. (NASDAQ:GTYH) share price has soared 167% in the last 1 year. Most would be very happy with that, especially in just one year! Also pleasing for shareholders was the 12% gain in the last three months. In contrast, the longer term returns are negative, since the share price is 30% lower than it was three years ago.
So let’s assess the underlying fundamentals over the last 1 year and see if they’ve moved in lock-step with shareholder returns.
Because GTY Technology Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year GTY Technology Holdings saw its revenue grow by 25%. That’s a fairly respectable growth rate. While that revenue growth is pretty good the share price performance outshone it, with a lift of 167% as mentioned above. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. 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 how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
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. If you are thinking of buying or selling GTY Technology Holdings stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
It’s nice to see that GTY Technology Holdings shareholders have gained 167% (in total) over the last year. This recent result is much better than the 9% drop suffered by shareholders each year (on average) over the last three. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that GTY Technology Holdings is showing 3 warning signs in our investment analysis , and 1 of those is concerning…
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.
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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