When we invest, we're generally looking for stocks that outperform the market average. And while active stock picking involves risks (and requires diversification) it can also provide excess returns. To wit, the A10 Networks share price has climbed 76% in five years, easily topping the market return of 45% (ignoring dividends). On the other hand, the more recent gains haven't been so impressive, with shareholders gaining just 17%.
A10 Networks isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last 5 years A10 Networks saw its revenue grow at 5.1% per year. That's not a very high growth rate considering the bottom line. The modest growth is probably broadly reflected in the share price, which is up 12%, per year over 5 years. We'd be looking for the underlying business to grow revenue a bit faster.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on A10 Networks's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's good to see that A10 Networks has rewarded shareholders with a total shareholder return of 17% in the last twelve months. That gain is better than the annual TSR over five years, which is 12%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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.
Of course A10 Networks may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.