Otovo (OB:OTOVO) is down 18% this week, but still offers shareholders a splendid 3-year CAGR of 27%
Otovo AS (OB:OTOVO) Shareholders may be worried after seeing the stock price drop 29% last month. But that doesn’t change the fact that returns over the past three years have been very strong. In fact, the stock price is up 106% from three years ago. After a run like that, some may not be surprised to see moderate prices. Fundamental trading performance will ultimately dictate whether the top is in place or if this is a great buying opportunity.
Given that long-term performance has been good but there has been a recent pullback of 18%, let’s see if the fundamentals match the stock price.
Check out our latest analysis for Otovo
Otovo has not been profitable for the last twelve months, we are unlikely to see a strong correlation between its share 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.
Otovo’s revenue grew 21% every year over three years. That’s a lot better than most loss-making companies. Along the way, the stock price has gained 27% annually, a solid pop by our standards. This suggests that the market has recognized the progress made by the company, at least to a significant extent. Nonetheless, we’d say Otovo is still worth investigating – successful businesses can often continue to grow for long periods of time.
You can see how earnings and income have changed over time below (find out the exact values by clicking on the image).
It is good to see that there has been significant insider buying over the past three months. This is a positive point. That said, we believe earnings and revenue growth trends are even more important factors to consider. Dive deeper into revenue with this interactive chart from Otovo profit, turnover and cash flow.
A different perspective
The last twelve months have not been great for Otovo shares, which have cost holders 27%, while the market was at the top about 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Investors are up over three years, booking 27% annually, much better than more recent returns. Sometimes when a good quality long term gainer has a weak period it turns out to be an opportunity, but you really need to be sure the quality is there. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. To this end, you should be aware of the 2 warning signs we spotted with Otovo.
If you like buying stocks alongside management then you might love this free list of companies. (Hint: insiders bought them).
Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on ANY exchange.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
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.