Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the MakeMyTrip Limited (NASDAQ:MMYT) share price had more than doubled in just one year - up 182%. On top of that, the share price is up 48% in about a quarter. It is also impressive that the stock is up 118% over three years, adding to the sense that it is a real winner.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
Given that MakeMyTrip only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over the last twelve months, MakeMyTrip's revenue grew by 37%. That's a fairly respectable growth rate. While that revenue growth is pretty good the share price performance outshone it, with a lift of 182% as mentioned above. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
NasdaqGS:MMYT Earnings and Revenue Growth March 22nd 2024
It is of course excellent to see how MakeMyTrip has grown profits over the years, but the future is more important for shareholders. You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
It's nice to see that MakeMyTrip shareholders have received a total shareholder return of 182% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 21% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand MakeMyTrip better, we need to consider many other factors. For example, we've discovered 1 warning sign for MakeMyTrip that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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