Inseego Corp. (NASDAQ:INSG) shareholders might be rather concerned because the share price has dropped 33% in the last month. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. Few could complain about the impressive 385% rise, throughout the period. 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.

In light of the stock dropping 28% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

Inseego wasn't profitable in the last twelve months, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year Inseego saw its revenue shrink by 14%. This is in stark contrast to the splendorous stock price, which has rocketed 385% since this time a year ago. There can be no doubt this kind of decoupling of revenue growth and share price growth is unusual to see in loss making companies. To us, a gain like this looks like speculation, but there might be historical trends to back it up.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Inseego's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Inseego shareholders have received a total shareholder return of 385% over the last year. That certainly beats the loss of about 12% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the 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. Case in point: We've spotted 4 warning signs for Inseego you should be aware of, and 2 of them shouldn't be ignored.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.