The 12% return this week takes iHeartMedia's (NASDAQ:IHRT) shareholders one-year gains to 71%
The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the iHeartMedia, Inc. (NASDAQ:IHRT) share price is up 71% in the last 1 year, clearly besting the market return of around 12% (not including dividends). So that should have shareholders smiling. On the other hand, longer term shareholders have had a tougher run, with the stock falling 46% in three years.
Since the stock has added US$68m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
iHeartMedia wasn't profitable in the last twelve months, 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.
Over the last twelve months, iHeartMedia's revenue grew by 1.4%. That's not a very high growth rate considering it doesn't make profits. In keeping with the revenue growth, the share price gained 71% in that time. While not a huge gain tht seems pretty reasonable. It could be worth keeping an eye on this one, especially if growth accelerates.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think iHeartMedia will earn in the future (free profit forecasts).
A Different Perspective
We're pleased to report that iHeartMedia shareholders have received a total shareholder return of 71% over one year. There's no doubt those recent returns are much better than the TSR loss of 11% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for iHeartMedia you should be aware of, and 2 of them shouldn't be ignored.
iHeartMedia is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been 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.