This week’s 16% return from Inspired Entertainment’s (NASDAQ:INSE) shareholders’ three-year gain of 33%

Buying a low cost index fund will give you average market returns. But if you invest in individual stocks, there are chances of some underperforming. Unfortunately for shareholders, while Inspired Entertainment, Inc. (NASDAQ:INSE) share price has risen 33% over the past three years, less than the market’s return. Zooming in, the stock is actually down 11% over the past year.

After the strong gains over the past week, it is worth seeing if the improvement in fundamentals has boosted the long-term returns.

Inspired Entertainment isn’t currently profitable, so most analysts will look at revenue growth to gauge how fast the underlying business is growing. Shareholders of unprofitable companies typically expect strong revenue growth. This is because rapid revenue growth can be easily extrapolated to estimate profits, which are often of considerable size.

Inspired Entertainment has seen a 20% YoY growth in its revenue for the last 3 years. This is much better than most loss-making companies. The stock is up 10% in that time — a nice but not impressive return. Generally, we would expect a strong share price given impressive revenue growth. It could be that the stock was already overpriced, or its loss could worry the market. But you might want to take a closer look at it.

The graphic below shows how earnings and earnings have changed over time (click image to reveal exact values).

earnings and revenue growth
NasdaqCM: INSE Earnings & Revenue Growth July 31st 2022

It’s good to see that there has been some significant insider buying in the past three months. This is a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. If you are thinking of Buying or Selling Inspired Entertainment stock you should check it out free Report showing analyst profit forecast.

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a different perspective

The total return of 11% that Inspired Entertainment’s shareholders received over the past year isn’t too far from a market return of 11%. The expectation is that long-term investors will have earned a total return of 0.5% per year over half a decade. If the share price has been affected by a change in sentiment rather than by deteriorating trading conditions, this could create opportunities. While it’s worth considering the various effects market conditions can have on a stock price, there are other factors that are even more important. For example, like risk. every company has, and we’ve seen 2 Warning Signs for Inspired Entertainment (1 of which is important!) You should be aware of this.

Inspired Entertainment isn’t the only stock that insiders are buying. For those who like to search winning investment This free The list of companies, growing with insider buying recently, may be just the ticket.

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

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This article by Simple Wall St. is general in nature. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology and our articles are not intended to be financial advice. It does not recommend buying or selling any stock, and does not take into account your objectives, or your financial situation. We aim to bring you long-term focused analytics powered by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative content. Simple Wall St does not have a position in any of the stocks mentioned.

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The views and opinions expressed here are the views and opinions of the author and do not necessarily represent those of Nasdaq, Inc.