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The nature of investing is that you win some, and you lose some. And unfortunately for Cloudera, Inc. (NYSE:CLDR) shareholders, the stock is a lot lower today than it was a year ago. To wit the share price is down 65% in that time. Cloudera may have better days ahead, of course; we've only looked at a one year period. Shareholders have had an even rougher run lately, with the share price down 55% in the last 90 days.
Cloudera 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. 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.
Cloudera grew its revenue by 42% over the last year. We think that is pretty nice growth. Unfortunately it seems investors wanted more, because the share price is down 65% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. For us it's important to consider when you think a company will become profitable, if you're basing your valuation on revenue.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Cloudera will earn in the future (free profit forecasts).
A Different Perspective
Given that the market gained 6.5% in the last year, Cloudera shareholders might be miffed that they lost 65%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 55%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Cloudera 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.