GDS Holdings' (NASDAQ:GDS) growing losses don't faze investors as the stock hikes 14% this past week
The last three months have been tough on GDS Holdings Limited (NASDAQ:GDS) shareholders, who have seen the share price decline a rather worrying 33%. But in stark contrast, the returns over the last half decade have impressed. In fact, the share price is 295% higher today. Generally speaking the long term returns will give you a better idea of business quality than short periods can. Ultimately business performance will determine whether the stock price continues the positive long term trend. While the long term returns are impressive, we do have some sympathy for those who bought more recently, given the 61% drop, in the last year.
Since it's been a strong week for GDS Holdings shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for GDS Holdings
GDS Holdings wasn't profitable in the last twelve months, 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. 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.
For the last half decade, GDS Holdings can boast revenue growth at a rate of 36% per year. That's well above most pre-profit companies. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 32% per year, in that time. So it seems likely that buyers have paid attention to the strong revenue growth. GDS Holdings seems like a high growth stock - so growth investors might want to add it to their watchlist.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
GDS Holdings is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
While the broader market lost about 6.9% in the twelve months, GDS Holdings shareholders did even worse, losing 61%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 32%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. 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. For instance, we've identified 2 warning signs for GDS Holdings that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
