Did Business Growth Power Tainan Enterprise (Cayman)'s (TPE:5906) Share Price Gain of 270%? – Simply Wall St


The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. For example, the Tainan Enterprise (Cayman) Co., Limited (TPE:5906) share price has soared 270% in the last half decade. Most would be very happy with that. On top of that, the share price is up 36% in about a quarter. But this could be related to the strong market, which is up 16% in the last three months.

Check out our latest analysis for Tainan Enterprise (Cayman)

Given that Tainan Enterprise (Cayman) 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 5 years Tainan Enterprise (Cayman) saw its revenue grow at 13% per year. That’s a pretty good long term growth rate. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 30% per year over five years. It’s well worth monitoring the growth trend in revenue, because if growth accelerates, that might signal an opportunity. When a growth trend accelerates, be it in revenue or earnings, it can indicate an inflection point for the business, which is can often be an opportunity for investors.

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The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth

TSEC:5906 Earnings and Revenue Growth January 7th 2021

Take a more thorough look at Tainan Enterprise (Cayman)’s financial health with this free report on its balance sheet.

A Different Perspective

It’s nice to see that Tainan Enterprise (Cayman) shareholders have received a total shareholder return of 129% over the last year. That gain is better than the annual TSR over five years, which is 30%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Tainan Enterprise (Cayman) , and understanding them should be part of your investment process.

Of course Tainan Enterprise (Cayman) may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on TW exchanges.

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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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