Yahoo Finance While Palo Alto Networks (NASDAQ:PANW) shareholders have made 210% in 5 years, increasing losses might now be front of mind as stock sheds 8.9% this week
Palo Alto Networks, Inc. (NASDAQ:PANW) shareholders might be concerned after seeing the share price drop 14% in the last month. But in stark contrast, the returns over the last half decade have impressed. It's fair to say most would be happy with 210% the gain in that time. So while it's never fun to see a share price fall, it's important to look at a longer time horizon. Only time will tell if there is still too much optimism currently reflected in the share price.
While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.
See our latest analysis for Palo Alto Networks
Because Palo Alto Networks made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
For the last half decade, Palo Alto Networks can boast revenue growth at a rate of 21% per year. That's well above most pre-profit companies. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 25% per year, in that time. So it seems likely that buyers have paid attention to the strong revenue growth. To our minds that makes Palo Alto Networks worth investigating - it may have its best days ahead.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Palo Alto Networks is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Palo Alto Networks stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
While it's never nice to take a loss, Palo Alto Networks shareholders can take comfort that their trailing twelve month loss of 8.5% wasn't as bad as the market loss of around 25%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 25% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand Palo Alto Networks better, we need to consider many other factors. For example, we've discovered 2 warning signs for Palo Alto Networks that you should be aware of before investing here.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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