Yahoo Finance PagerDuty (NYSE:PD) investors are sitting on a loss of 36% if they invested a year ago
The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by PagerDuty, Inc. (NYSE:PD) shareholders over the last year, as the share price declined 36%. That's well below the market decline of 11%. Even if you look out three years, the returns are still disappointing, with the share price down34% in that time. Furthermore, it's down 13% in about a quarter. That's not much fun for holders.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
See our latest analysis for PagerDuty
PagerDuty isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year PagerDuty saw its revenue grow by 33%. We think that is pretty nice growth. Unfortunately that wasn't good enough to stop the share price dropping 36%. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
The last twelve months weren't great for PagerDuty shares, which performed worse than the market, costing holders 36%. Meanwhile, the broader market slid about 11%, likely weighing on the stock. Shareholders have lost 10% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand PagerDuty better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with PagerDuty (including 1 which is significant) .
Of course PagerDuty 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 US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
