By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, Aspen Aerogels, Inc. (NYSE:ASPN) shareholders have seen the share price rise 44% over three years, well in excess of the market return (29%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 7.1%.
Given that Aspen Aerogels didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over the last three years Aspen Aerogels has grown its revenue at 9.1% annually. That's pretty nice growth. The share price gain of 13% per year shows that the market is paying attention to this growth. If that's the case, then it could be well worth while to research the growth trajectory. Keep in mind that the strength of the balance sheet impacts the options open to the company.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Aspen Aerogels shareholders are up 7.1% for the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 0.3% endured over half a decade. So this might be a sign the business has turned its fortunes around. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Aspen Aerogels , and understanding them should be part of your investment process.
We will like Aspen Aerogels 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 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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