Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Shake Shack Inc. (NYSE:SHAK) share price has soared 139% return in just a single year. It's also good to see the share price up 28% over the last quarter. But this move may well have been assisted by the reasonably buoyant market (up 13% in 90 days). It is also impressive that the stock is up 55% over three years, adding to the sense that it is a real winner.

On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.

We don't think that Shake Shack's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Shake Shack grew its revenue by 17% last year. That's a fairly respectable growth rate. The revenue growth is decent but the share price had an even better year, gaining 139%. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.

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

Shake Shack is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Shake Shack in this interactive graph of future profit estimates.

A Different Perspective

We're pleased to report that Shake Shack shareholders have received a total shareholder return of 139% over one year. That gain is better than the annual TSR over five years, which is 16%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Shake Shack better, we need to consider many other factors. Even so, be aware that Shake Shack is showing 1 warning sign in our investment analysis , you should know about...

We will like Shake Shack better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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.