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Does ForeScout Technologies’s Share Price Gain of 29% Match Its Business Performance?

Simply Wall St

Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. To wit, the ForeScout Technologies, Inc. (NASDAQ:FSCT) share price is 29% higher than it was a year ago, much better than the market return of around 3.0% (not including dividends) in the same period. That’s a solid performance by our standards! ForeScout Technologies hasn’t been listed for long, so it’s still not clear if it is a long term winner.

See our latest analysis for ForeScout Technologies

ForeScout Technologies isn’t a profitable company, so it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

ForeScout Technologies grew its revenue by 35% last year. We respect that sort of growth, no doubt. While the share price performed well, gaining 29% over twelve months, you could argue the revenue growth warranted something better. If the company can maintain the revenue growth, the share price could go higher still. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

NasdaqGM:FSCT Income Statement, March 1st 2019

Balance sheet strength is crucual. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

ForeScout Technologies shareholders should be happy with the total gain of 29% over the last twelve months. And the share price momentum remains respectable, with a gain of 53% in the last three months. This suggests the company is continuing to win over new investors. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

If you are like me, then you will 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.