Crunchfish (STO:CFISH) shareholder returns have been splendid, gaining 138% in 5 years

When investing, we generally look for stocks that outperform the market average. And the truth is, you can make big gains if you buy good quality businesses at the right price. Namely, Crunchfish’s stock price has soared 73% in five years, easily outpacing the market return of 42% (excluding dividends).

Last week proved lucrative for Crunchfish investors, so let’s see if fundamentals have driven the company’s five-year performance.

Check out our latest analysis for Crunchfish

Crunchfish has not been profitable for the last twelve months, we are unlikely to see a strong correlation between its stock price and its earnings per share (EPS). Income is arguably our second best option. Shareholders of unprofitable companies generally expect strong revenue growth. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

Over the past half-decade, Crunchfish can boast of growing revenue by 17% per year. Even measured against other revenue-focused companies, that’s a good result. While the compound gain of 12% per year is good, it is not unreasonable given the strong revenue growth. If the strong revenue growth continues, we expect the stock price to follow, over time. The opportunity lies where the market has not fully assessed the growth of the underlying business.

The company’s revenues and profits (over time) are shown in the image below (click to see exact figures).

Balance sheet strength is critical. It might be interesting to take a look at our free report on the evolution of its financial situation over time.

What about the Total Shareholder Return (TSR)?

Investors should note that there is a difference between Crunchfish’s total shareholder return (TSR) and its share price change, which we’ve covered above. Arguably, TSR is a more comprehensive calculation of return as it takes into account the value of dividends (as if reinvested), as well as the hypothetical value of any discounted capital that has been offered to shareholders. Crunchfish did not pay dividends, but its TSR of 138% exceeds its share price return of 73%, implying that it either started a business or raised capital at a discount; thereby providing added value to shareholders.

A different perspective

Crunchfish investors had a tough year, with a total loss of 51%, against a market gain of around 0.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the positive side, long-term shareholders have made money, with a gain of 19% per year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. Like risks, for example. Every business has them, and we’ve spotted 6 warning signs for Crunchfish (1 of which can’t be ignored!) that you should know about.

We’ll like Crunchfish better if we see big insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on SE exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.