Further weakness as Nutanix (NASDAQ:NTNX) drops 11% this week, taking one-year losses to 51%

It is a pleasure to report that the Nutanix, Inc. (NASDAQ:NTNX) is up 36% in the last quarter. But that doesn't change the fact that the returns over the last year have been disappointing. Specifically, the stock price slipped by 51% in that time. The share price recovery is not so impressive when you consider the fall. You could argue that the sell-off was too severe.

Since Nutanix has shed US$518m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Nutanix

Given that Nutanix didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

In the last twelve months, Nutanix increased its revenue by 13%. That's not a very high growth rate considering it doesn't make profits. Without profits, and with revenue growth sluggish, you get a 51% loss for shareholders, over the year. We'd want to see evidence that future revenue growth will be stronger before getting too interested. Of course, the market can be too impatient at times. Why not take a closer look at this one so you're ready to pounce if growth does accelerate.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

Nutanix is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

We regret to report that Nutanix shareholders are down 51% for the year. Unfortunately, that's worse than the broader market decline of 22%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 1.6% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 3 warning signs for Nutanix (1 can't be ignored!) that you should be aware of before investing here.

Of course Nutanix may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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