Did The Underlying Business Drive NewAge’s (NASDAQ:NBEV) Lovely 505% Share Price Gain?

Long term investing can be life changing when you buy and hold the truly great businesses. And highest quality companies can see their share prices grow by huge amounts. Don’t believe it? Then look at the NewAge, Inc. (NASDAQ:NBEV) share price. It’s 505% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. It’s also good to see the share price up 43% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

It really delights us to see such great share price performance for investors.

View our latest analysis for NewAge

NewAge isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years NewAge saw its revenue grow at 64% per year. Even measured against other revenue-focussed companies, that’s a good result. Fortunately, the market has not missed this, and has pushed the share price up by 43% per year in that time. It’s never too late to start following a top notch stock like NewAge, since some long term winners go on winning for decades. So we’d recommend you take a closer look at this one, but keep in mind the market seems optimistic.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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

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 NewAge stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

Investors in NewAge had a tough year, with a total loss of 34%, against a market gain of about 20%. 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. Longer term investors wouldn’t be so upset, since they would have made 43%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It’s always interesting to track share price performance over the longer term. But to understand NewAge better, we need to consider many other factors. Case in point: We’ve spotted 4 warning signs for NewAge you should be aware of, and 1 of them doesn’t sit too well with us.

NewAge is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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. 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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