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While ShotSpotter, Inc. (NASDAQ:SSTI) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 23% in the last quarter. On the other hand the share price is higher than it was three years ago. In that time, it is up 13%, which isn't bad, but not amazing either.
While ShotSpotter made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 3 years ShotSpotter saw its revenue grow at 19% per year. That's pretty nice growth. The stock is up 4% per year over three years, which isn't bad, but is nothing to write home about. Arguably, that means, the market (previously) expected stronger growth from the company. Of course, if the company can tread the path to profitability, then the current price might be too pessimistic.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for ShotSpotter in this interactive graph of future profit estimates.
A Different Perspective
ShotSpotter produced a TSR of 11% over the last year. It's always nice to make money but this return falls short of the market return which was about 60% for the year. On the bright side that gain is actually better than the average return of 4% over the last three years, implying that the company is doing better recently. If the share price is up as a result of improved business performance, then this kind of improvement may be sustained. It's always interesting to track share price performance over the longer term. But to understand ShotSpotter better, we need to consider many other factors. Even so, be aware that ShotSpotter is showing 5 warning signs in our investment analysis , you should know about...
ShotSpotter is not the only stock that insiders are buying. 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 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.
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