eole (TSE:2334) shareholder returns have been incredible, earning 777% in 1 year

eole Inc. (TSE:2334) shareholders might be concerned after seeing the share price drop 18% in the last quarter. But over the last year the share price has taken off like one of Elon Musk's rockets. Indeed, the share price is up a whopping 777% in that time. So it is not that surprising to see the stock retrace a little. The real question is whether the fundamental business performance can justify the strong increase over the long term. Anyone who held for that rewarding ride would probably be keen to talk about it.

Since it's been a strong week for eole shareholders, let's have a look at trend of the longer term fundamentals.

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We don't think that eole's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

eole grew its revenue by 56% last year. That's a head and shoulders above most loss-making companies. But the share price seems headed to the moon, up 777% as previously highlighted. Despite the strong growth, it's certainly possible the market has gotten a little over-excited. So this looks like a great watchlist candidate for investors who look for high growth inflexion points.

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

This free interactive report on eole'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 eole has rewarded shareholders with a total shareholder return of 777% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 25% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with eole (at least 1 which is concerning) , and understanding them should be part of your investment process.

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