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One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Franklin Covey Co. (NYSE:FC), which is up 98%, over three years, soundly beating the market return of 38% (not including dividends). On the other hand, the returns haven’t been quite so good recently, with shareholders up just 9.6%.
See our latest analysis for Franklin Covey
Given that Franklin Covey didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 3 years Franklin Covey saw its revenue grow at 2.5% per year. That’s not a very high growth rate considering it doesn’t make profits. The modest growth is probably broadly reflected in the share price, which is up 26%, per year over 3 years. The real question is when the business will generate profits, and how quickly they will grow. Given the market doesn’t seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
This free interactive report on Franklin Covey’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It’s good to see that Franklin Covey has rewarded shareholders with a total shareholder return of 9.6% in the last twelve months. That’s better than the annualised return of 8.8% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on Franklin Covey it might be wise to click here to see if insiders have been buying or selling shares.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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 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. Thank you for reading.