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Did You Miss Extreme Networks' (NASDAQ:EXTR) Impressive 229% Share Price Gain?

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Simply Wall St
·3 min read
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Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right stock, you can make a lot more than 100%. For example, the Extreme Networks, Inc. (NASDAQ:EXTR) share price has soared 229% return in just a single year. It's also good to see the share price up 24% over the last quarter. On the other hand, longer term shareholders have had a tougher run, with the stock falling 9.8% in three years.

View our latest analysis for Extreme Networks

Because Extreme Networks 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 year Extreme Networks saw its revenue shrink by 12%. So we would not have expected the share price to rise 229%. It just goes to show the market doesn't always pay attention to the reported numbers. It's quite likely the revenue fall was already priced in, anyway.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

It's good to see that Extreme Networks has rewarded shareholders with a total shareholder return of 229% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 24% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Extreme Networks better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Extreme Networks (of which 1 can't be ignored!) you should know about.

Extreme 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 (at) simplywallst.com.