The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. For example, the Sumo Group Plc (LON:SUMO) share price is up 48% in the last year, clearly besting the market return of around 12% (not including dividends). That's a solid performance by our standards! We'll need to follow Sumo Group for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
We don't think that Sumo Group's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. 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 twelve months, Sumo Group's revenue grew by 20%. We respect that sort of growth, no doubt. While the share price performed well, gaining 48% over twelve months, you could argue the revenue growth warranted it. If the company can maintain the revenue growth, the share price could go higher still. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Sumo Group is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Sumo Group will earn in the future (free analyst consensus estimates)
A Different Perspective
Sumo Group shareholders should be happy with the total gain of 48% over the last twelve months. And the share price momentum remains respectable, with a gain of 19% in the last three months. This suggests the company is continuing to win over new investors. Before spending more time on Sumo Group it might be wise to click here to see if insiders have been buying or selling shares.
Of course Sumo Group 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 GB exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.
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. Thank you for reading.