<!-- HTML_TAG_START -->NasdaqGS:CRAI Earnings and Revenue Growth December 22nd 2024<!-- HTML_TAG_END -->
Rekor Systems, Inc. (NASDAQ:REKR) has rebounded strongly over the last week, with the share price soaring 58%. But that doesn’t change the fact that the returns over the last three years have been stomach churning. To wit, the share price sky-dived 80% in that time. So it’s about time shareholders saw some gains. Of course the real question is whether the business can sustain a turnaround. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
On a more encouraging note the company has added US$45m to its market cap in just the last 7 days, so let’s see if we can determine what’s driven the three-year loss for shareholders.
Check out our latest analysis for Rekor Systems
Given that Rekor Systems 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 desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
Over three years, Rekor Systems grew revenue at 50% per year. That’s well above most other pre-profit companies. So why has the share priced crashed 22% per year, in the same time? You’d want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn’t lead to profits. Unless the balance sheet is strong, the company might have to raise capital.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Rekor Systems
Investors in Rekor Systems had a tough year, with a total loss of 61%, against a market gain of about 26%. 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. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. We realise that Baron Rothschild has said investors should “buy when there is blood on the streets”, but we caution that investors should first be sure they are buying a high quality business. 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. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for Rekor Systems (of which 1 can’t be ignored!) you should know about.
