It might be of some concern to shareholders to see the A2Z Smart Technologies Corp. (CVE:AZ) share price down 24% in the last month. But that doesn't change the fact that the returns over the last year have been spectacular. In fact, it is up 802% in that time. Arguably, the recent fall is to be expected after such a strong rise. The real question is whether the fundamental business performance can justify the strong increase over the long term.
It really delights us to see such great share price performance for investors.
A2Z Smart Technologies isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
A2Z Smart Technologies grew its revenue by 3.3% last year. That's not a very high growth rate considering it doesn't make profits. So the 802% gain in just twelve months is completely unexpected. We're happy that investors have made money, but we can't help questioning whether the rise is sustainable. This is an example of the huge profits some lucky shareholders occasionally make on growth stocks.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
A2Z Smart Technologies boasts a total shareholder return of 802% for the last year. We regret to report that the share price is down 11% over ninety days. Shorter term share price moves often don't signify much about the business itself. 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. To that end, you should learn about the 4 warning signs we've spotted with A2Z Smart Technologies (including 1 which makes us a bit uncomfortable) .
We will like A2Z Smart Technologies better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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. 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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