U.S. markets closed
  • S&P 500

    4,166.45
    -55.41 (-1.31%)
     
  • Dow 30

    33,290.08
    -533.32 (-1.58%)
     
  • Nasdaq

    14,030.38
    -131.02 (-0.93%)
     
  • Russell 2000

    2,237.75
    -49.71 (-2.17%)
     
  • Crude Oil

    71.50
    -0.14 (-0.20%)
     
  • Gold

    1,763.90
    -5.10 (-0.29%)
     
  • Silver

    25.84
    -0.12 (-0.48%)
     
  • EUR/USD

    1.1862
    -0.0048 (-0.40%)
     
  • 10-Yr Bond

    1.4500
    -0.0610 (-4.04%)
     
  • GBP/USD

    1.3801
    -0.0123 (-0.88%)
     
  • USD/JPY

    110.1500
    -0.0810 (-0.07%)
     
  • BTC-USD

    35,516.00
    -458.01 (-1.27%)
     
  • CMC Crypto 200

    888.52
    -51.42 (-5.47%)
     
  • FTSE 100

    7,017.47
    -135.96 (-1.90%)
     
  • Nikkei 225

    28,964.08
    -54.22 (-0.19%)
     

Did F5 Networks' (NASDAQ:FFIV) Share Price Deserve to Gain 11%?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

It hasn't been the best quarter for F5 Networks, Inc. (NASDAQ:FFIV) shareholders, since the share price has fallen 11% in that time. In contrast the stock is up over the last three years. However, it's unlikely many shareholders are elated with the share price gain of 11% over that time, given the rising market.

Check out our latest analysis for F5 Networks

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over the last three years, F5 Networks failed to grow earnings per share, which fell 4.2% (annualized).

While EPS is down but the share price is moving up, neither move is particularly drastic, suggesting the market was previously too pessimistic. Still, if EPS declines indefinitely, the share price will likely follow (especially if the company makes a loss).

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

While the broader market gained around 23% in the last year, F5 Networks shareholders lost 3.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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 1 warning sign with F5 Networks , and understanding them should be part of your investment process.

F5 Networks is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.