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Does Plug Power's (NASDAQ:PLUG) Share Price Gain of 84% Match Its Business Performance?

Simply Wall St

One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Plug Power Inc. ( NASDAQ:PLUG ), which is up 84%, over three years, soundly beating the market return of 38% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 42%.

View our latest analysis for Plug Power

Plug Power isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.

Over the last three years Plug Power has grown its revenue at 28% annually. That's much better than most loss-making companies. The share price rise of 23% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put Plug Power on your radar. If the company is trending towards profitability then it could be very interesting.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NasdaqCM:PLUG Income Statement, September 16th 2019

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Plug Power in this interactive graph of future profit estimates .

A Different Perspective

We're pleased to report that Plug Power shareholders have received a total shareholder return of 42% over one year. There's no doubt those recent returns are much better than the TSR loss of 9.8% per year over five years. This makes us a little wary, but the business might have turned around its fortunes. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

Plug Power is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.