The 4.5% return this week takes Energean's (LON:ENOG) shareholders three-year gains to 69%

Simply Wall St
·2 min read

By buying an index fund, investors can approximate the average market return. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Energean plc (LON:ENOG), which is up 69%, over three years, soundly beating the market decline of 2.4% (not including dividends).

The past week has proven to be lucrative for Energean investors, so let's see if fundamentals drove the company's three-year performance.

See our latest analysis for Energean

Because Energean made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last three years Energean has grown its revenue at 67% annually. That's much better than most loss-making companies. The share price rise of 19% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put Energean on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

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. This free report showing analyst forecasts should help you form a view on Energean

A Different Perspective

It's nice to see that Energean shareholders have gained 59% (in total) over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 19%. Given the track record of solid returns over varying time frames, it might be worth putting Energean on your watchlist. It's always interesting to track share price performance over the longer term. But to understand Energean better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Energean , and understanding them should be part of your investment process.

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 GB 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.

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