It wasn’t the best quarter for CyberArk Software Ltd. (NASDAQ:CYBR) shareholders as the stock price has fallen 25% during that time. But in stark contrast, returns over the past half decade have impressed. In fact, the stock price has risen an impressive 165% during that time. While it’s never fun to see a stock price fall, it’s important to look at a longer time horizon. Ultimately, business development will decide whether the share price continues the positive long-term trend.
Although CyberArk Software lost $268 million from its market cap this week, let’s take a look at its longer-term fundamental trends and see if they’ve driven returns.
Check out our latest analysis for CyberArk Software
CyberArk Software isn’t profitable right now, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders in unprofitable companies typically expect strong revenue growth. That’s because rapid revenue growth can easily be extrapolated to projected earnings, which are often substantial.
Over the past 5 years, CyberArk Software has experienced revenue growth of 16% per year. That’s well above most pre-profit companies. So it’s not entirely surprising that the stock price reflected this development, rising at a rate of 21% per year during this period. This suggests that the market has really recognized the strides the company has made. In our view, CyberArk software is worth investigating – it may have its best days ahead.
The chart below shows how revenue and earnings have evolved over time (click on the image to find out the exact values).
CyberArk Software is well known among investors and many astute analysts have attempted to predict future earnings levels. In it you can see what analysts are predicting for CyberArk Software interactive Chart of Future Earnings Estimates.
A different perspective
It’s certainly disappointing to see CyberArk Software’s stock down 1.3% for the year, but that wasn’t as bad as the 20% market drop. Long-term investors wouldn’t be so upset, since they would have earned 21% each year over five years. The company may only face short-term problems, but shareholders should keep a close eye on fundamentals. While it’s worth considering the various effects that market conditions can have on the stock price, there are other factors that are even more important. Think of risks, for example. Every company has them and we discovered them 1 CyberArk Software Warning Sign you should know.
Of course CyberArk Software might not be the best stock to buy. You might want to see this free Collection of growth stocks.
Please note that the market returns reported in this article reflect the market-weighted average returns of stocks currently traded on US exchanges.
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This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.