The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But if you pick the right stock, you can make a lot more than 100%. For example, the DraftKings Inc. (NASDAQ:DKNG) share price has soared 116% return in just a single year. It’s also good to see the share price up 44% over the last quarter. Unfortunately the longer term returns are not so good, with the stock falling 18% in the last three years.
Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.
Check out our latest analysis for DraftKings
Given that DraftKings 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. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year DraftKings saw its revenue grow by 85%. That’s stonking growth even when compared to other loss-making stocks. Meanwhile, the market has paid attention, sending the share price soaring 116% in response. It’s great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we’re cautious, but there’s no doubt its worth watching.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
DraftKings is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
We’re pleased to report that DraftKings rewarded shareholders with a total shareholder return of 116% over the last year. That certainly beats the loss of about 6% per year over three years. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we’ve discovered 1 warning sign for DraftKings that you should be aware of before investing here.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.
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.
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