DUG Technology (ASX:DUG) shareholders have earned a 169% return over the last year

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the DUG Technology Ltd (ASX:DUG) share price has soared 169% in the last 1 year. Most would be very happy with that, especially in just one year! On top of that, the share price is up 25% in about a quarter. DUG Technology hasn't been listed for long, so it's still not clear if it is a long term winner.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

See our latest analysis for DUG Technology

Because DUG Technology 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last year DUG Technology saw its revenue grow by 25%. We respect that sort of growth, no doubt. While that revenue growth is pretty good the share price performance outshone it, with a lift of 169% as mentioned above. Given that the business has made good progress on the top line, it would be worth taking a look at its path to profitability. Of course, we are always cautious about succumbing to 'fear of missing out' when a stock has shot up strongly.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for DUG Technology in this interactive graph of future profit estimates.

A Different Perspective

DUG Technology shareholders should be happy with the total gain of 169% over the last twelve months. The more recent returns haven't been as impressive as the longer term returns, coming in at just 25%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with DUG Technology , and understanding them should be part of your investment process.

DUG Technology is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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