Pegasystems (NASDAQ:PEGA) shareholders have endured a 69% loss from investing in the stock a year ago

Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of Pegasystems Inc. (NASDAQ:PEGA) have suffered share price declines over the last year. The share price is down a hefty 69% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 57% lower than three years ago).

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

View our latest analysis for Pegasystems

Pegasystems 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Pegasystems grew its revenue by 3.6% over the last year. That's not a very high growth rate considering it doesn't make profits. Without profits, and with revenue growth sluggish, you get a 69% loss for shareholders, over the year. Like many holders, we really want to see better revenue growth in companies that lose money. 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.

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

earnings-and-revenue-growth

Pegasystems is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Pegasystems stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

We regret to report that Pegasystems shareholders are down 69% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 22%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5% over the last half decade. 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. If you would like to research Pegasystems in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

We will like Pegasystems better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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 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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