It's not always an easy task to determine which figures matter more when investing.
For example, which metric is more important? Sales? Earnings per share? Net debt?
The answer, of course, is that it depends. What's crucial for one company or industry is often less important to another.
Rocket Lab USA (RKLB 4.99%) stock has witnessed a nearly 400% appreciation over the last 12 months. So with regards to its business, which is the most important number investors should be keeping an eye on?
It's all about revenue growth
Rocket Lab is a hypergrowth stock. That means it is in the very early stages of its life cycle, having come public via a SPAC merger in 2021.
NASDAQ: RKLB
Key Data Points
With a market cap of only $8.4 billion as of this writing, Rocket Lab remains a small company. For context, it would take roughly 400 companies the size of Rocket Lab to match Apple's massive $3.3 trillion market cap.
So, for smaller companies like Rocket Lab, it's common to focus on growth over profits -- at least to start. That's why investors should zero in on Rocket Lab's revenue growth. This figure is reported in each quarterly report, showing how much revenue grew on a percentage basis when compared to the same quarter in the prior year.
For example, in its most recent quarterly report (for the three months ending on Dec. 31), Rocket Lab registered quarterly revenue growth of 121%. Indeed, over the last two years, the company has averaged revenue growth of 48% -- exceptional growth.
What to watch
Nevertheless, this high growth rate does present a risk -- if the company's growth rate were to decline, its stock could tumble.
That's why investors should keep an eye on it -- along with analyst estimates. According to consensus estimates compiled by Yahoo! Finance, analysts expect Rocket Lab to deliver 33% revenue growth in 2025.
While still impressive, that figure would represent a deceleration in growth and could trigger a decline in the company's stock price. Therefore, investors should keep a close watch on it going forward.
