The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. For instance the Spectral Medical Inc. (TSE:EDT) share price is 122% higher than it was three years ago. How nice for those who held the stock! Meanwhile the share price is 1.7% higher than it was a week ago.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

View our latest analysis for Spectral Medical

We don't think Spectral Medical's revenue of CA$1,901,000 is enough to establish significant demand. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that Spectral Medical comes up with a great new product, before it runs out of money.

Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that the company needed to issue more shares recently so that it could raise enough money to continue pursuing its business plan. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Spectral Medical has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Spectral Medical had liabilities exceeding cash when it last reported, according to our data. That put it in the highest risk category, according to our analysis. So we're not surprised to see the stock up 92% per year, over 3 years , once the company took on some more capital. It's clear more than a few people believe in the potential. The image below shows how Spectral Medical's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.

A Different Perspective

It's nice to see that Spectral Medical shareholders have received a total shareholder return of 90% over the last year. That certainly beats the loss of about 2% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Spectral Medical better, we need to consider many other factors. For example, we've discovered 4 warning signs for Spectral Medical (2 shouldn't be ignored!) that you should be aware of before investing here.