GoGold Resources Inc. (TSE:GGD) shareholders might be concerned after seeing the share price drop 14% in the last month. But over the last three years the stock has shone bright like a diamond. Indeed, the share price is up a whopping 623% in that time. Arguably, the recent fall is to be expected after such a strong rise. The thing to consider is whether there is still too much elation around the company’s prospects. Anyone who held for that rewarding ride would probably be keen to talk about it.
Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.
Given that GoGold Resources only made minimal earnings in the last twelve months, we’ll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
Over the last three years GoGold Resources has grown its revenue at 34% annually. That’s well above most pre-profit companies. And it’s not just the revenue that is taking off. The share price is up 93% per year in that time. It’s always tempting to take profits after a share price gain like that, but high-growth companies like GoGold Resources can sometimes sustain strong growth for many years. So we’d recommend you take a closer look at this one, or even put it on your watchlist.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling GoGold Resources stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
GoGold Resources shareholders are down 3.4% for the year, but the market itself is up 11%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 32% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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 risks, for instance. Every company has them, and we’ve spotted 3 warning signs for GoGold Resources 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 CA exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.