While shareholders of Palo Alto Networks (NASDAQ:PANW) are in the black over 5 years, those who bought a week ago aren't so fortunate

We think all investors should try to buy and hold high quality multi-year winners. And highest quality companies can see their share prices grow by huge amounts. To wit, the Palo Alto Networks, Inc. (NASDAQ:PANW) share price has soared 322% over five years. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 11% in about a quarter.

Since the long term performance has been good but there's been a recent pullback of 3.1%, let's check if the fundamentals match the share price.

See our latest analysis for Palo Alto Networks

We don't think that Palo Alto Networks' modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 5 years Palo Alto Networks saw its revenue grow at 22% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 33% per year in that time. Despite the strong run, top performers like Palo Alto Networks have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

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

earnings-and-revenue-growth

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

We're pleased to report that Palo Alto Networks shareholders have received a total shareholder return of 48% over one year. That's better than the annualised return of 33% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Even so, be aware that Palo Alto Networks is showing 2 warning signs in our investment analysis , you should know about...

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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