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Does Yext's (NYSE:YEXT) Share Price Gain of 12% Match Its Business Performance?

Simply Wall St

There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But if when you choose to buy stocks, some of them will be below average performers. For example, the Yext, Inc. (NYSE:YEXT), share price is up over the last year, but its gain of 12% trails the market return. We'll need to follow Yext for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for Yext

Given that Yext 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Yext grew its revenue by 32% last year. We respect that sort of growth, no doubt. The share price gain of 12% seems pretty muted, considering the growth. Its possible that shareholders had expected higher growth. But this one could be a worth watching - a maiden profit would likely catch the market's attention.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

NYSE:YEXT Income Statement, January 22nd 2020

We like that insiders have been buying shares in the last twelve months. 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

We're happy to report that Yext are up 12% over the year. The bad news is that's no better than the average market return, which was roughly 28%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 8.2% in the last three months. It might be that investors are more concerned about the business lately due to some fundamental change (or else the share price simply got ahead of itself, previously). It's always interesting to track share price performance over the longer term. But to understand Yext better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Yext , and understanding them should be part of your investment process.

Yext 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.

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.

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. Thank you for reading.