The Gevo, Inc. (NASDAQ:GEVO) share price is down a rather concerning 37% in the last month. But that cannot eclipse the spectacular share price rise weve seen over the last twelve months. In that time, shareholders have had the pleasure of a 602% boost to the share price. So we wouldnt blame sellers for taking some profits. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).
It really delights us to see such great share price performance for investors.
Gevo isnt currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesnt make profits, wed generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Gevo actually shrunk its revenue over the last year, with a reduction of 77%. So its very confusing to see that the share price gained a whopping 602%. Its pretty clear the market isnt basing its valuation on fundamental metrics like revenue. While this gain looks like speculative buying to us, sometimes speculation pays off.
The companys revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
NasdaqCM:GEVO Earnings and Revenue Growth April 19th 2021
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Its good to see that Gevo has rewarded shareholders with a total shareholder return of 602% in the last twelve months. Theres no doubt those recent returns are much better than the TSR loss of 14% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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. Case in point: Weve spotted 3 warning signs for Gevo you should be aware of, and 1 of them doesnt sit too well with us.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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. 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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