For many, the main point of investing in the stock market is to achieve spectacular returns. When you find (and hold) a big winner, you can markedly improve your finances. For example, the American Coastal Insurance Corporation (NASDAQ:ACIC) share price is up a whopping 564% in the last 1 year, a handsome return in a single year. It's also good to see the share price up 58% over the last quarter. And shareholders have also done well over the long term, with an increase of 107% in the last three years. Anyone who held for that rewarding ride would probably be keen to talk about it.
The past week has proven to be lucrative for American Coastal Insurance investors, so let's see if fundamentals drove the company's one-year performance.
See our latest analysis for American Coastal Insurance
Because American Coastal Insurance made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last twelve months, American Coastal Insurance's revenue grew by 40%. We respect that sort of growth, no doubt. Arguably it's more than reflected in the truly wondrous share price gain of 564% in the last year. We're always cautious when the share price is up so much, but there's certainly enough revenue growth to justify taking a closer look at American Coastal Insurance.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on American Coastal Insurance
A Different Perspective
It's good to see that American Coastal Insurance has rewarded shareholders with a total shareholder return of 564% in the last twelve months. That certainly beats the loss of about 3% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand American Coastal Insurance better, we need to consider many other factors. Take risks, for example - American Coastal Insurance has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
There are plenty of other companies that have insiders buying up shares. You probably do 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.