Despite currently being unprofitable, Cognyte Software (NASDAQ:CGNT) has delivered a 11% return to shareholders over 1 year
It might be of some concern to shareholders to see the Cognyte Software Ltd. (NASDAQ:CGNT) share price down 15% in the last month. But at least the stock is up over the last year. But to be blunt its return of 11% fall short of what you could have got from an index fund (around 15%).
While the stock has fallen 11% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
Check out our latest analysis for Cognyte Software
Given that Cognyte Software didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Cognyte Software actually shrunk its revenue over the last year, with a reduction of 33%. The lacklustre gain of 11% over twelve months, is not a bad result given the falling revenue. Generally we're pretty unenthusiastic about loss making stocks that are not growing revenue.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Cognyte Software's financial health with this free report on its balance sheet.
A Different Perspective
Cognyte Software shareholders have gained 11% for the year. The bad news is that's no better than the average market return, which was roughly 15%. Shareholders are doubtless excited that the stock price has been doing even better lately, with a gain of 18% in just ninety days. It's worth taking note when returns accelerate, as it can indicate positive change in the underlying business, and winners often keep winning. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Cognyte Software (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.
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.
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