Yahoo Finance Even though ShotSpotter (NASDAQ:SSTI) has lost US$41m market cap in last 7 days, shareholders are still up 92% over 5 years
ShotSpotter, Inc. (NASDAQ:SSTI) shareholders might be concerned after seeing the share price drop 11% in the last week. Looking further back, the stock has generated good profits over five years. It has returned a market beating 92% in that time. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 31% drop, in the last year.
In light of the stock dropping 11% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.
View our latest analysis for ShotSpotter
Because ShotSpotter 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last 5 years ShotSpotter saw its revenue grow at 22% per year. Even measured against other revenue-focussed companies, that's a good result. It's good to see that the stock has 14%, but not entirely surprising given revenue shows strong growth. If you think there could be more growth to come, now might be the time to take a close look at ShotSpotter. Of course, you'll have to research the business more fully to figure out if this is an attractive opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling ShotSpotter stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
While the broader market lost about 20% in the twelve months, ShotSpotter shareholders did even worse, losing 31%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. Case in point: We've spotted 2 warning signs for ShotSpotter you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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.
