The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. For example, the Pure Storage, Inc. (NYSE:PSTG) share price has soared 150% in the last three years. Most would be happy with that. On top of that, the share price is up 47% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
Since it's been a strong week for Pure Storage shareholders, let's have a look at trend of the longer term fundamentals.
While Pure Storage made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
Pure Storage's revenue trended up 18% each year over three years. That's pretty nice growth. Broadly speaking, this solid progress may well be reflected by the healthy share price gain of 36% per year over three years. It's hard to value pre-profit businesses, but it seems like the market has become a lot more optimistic about this one! Some investors like to buy in just after a company becomes profitable, since that can be a powerful inflexion point.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Pure Storage 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 Pure Storage stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
We're pleased to report that Pure Storage shareholders have received a total shareholder return of 118% over one year. That gain is better than the annual TSR over five years, which is 18%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Pure Storage is showing 3 warning signs in our investment analysis , you should know about...
Of course Pure Storage 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 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.