Buying shares in the best businesses can build meaningful wealth for you and your family.
And highest quality companies can see their share prices grow by huge amounts.
Just think about the savvy investors who held PAR Technology Corporation (NYSE:PAR) shares for the last five years, while they gained 439%.
If that doesn’t get you thinking about long term investing, we don’t know what will.
On top of that, the share price is up 31% in about a quarter.
PAR Technology isn’t a profitable company, so it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option.
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 PAR Technology saw its revenue shrink by 0.6% per year.
This is in stark contrast to the strong share price growth of 40%, compound, per year.
There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies.
At the risk of upsetting holders, this does suggest that hope for a better future is playing a significant role in the share price action.
Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It’s good to see that PAR Technology has rewarded shareholders with a total shareholder return of 139% in the last twelve months.
That gain is better than the annual TSR over five years, which is 40%. 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.
You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
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 US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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