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Is PROS Holdings's (NYSE:PRO) 116% Share Price Increase Well Justified?

Simply Wall St

It hasn't been the best quarter for PROS Holdings, Inc. (NYSE:PRO) shareholders, since the share price has fallen 25% in that time. In contrast, the return over three years has been impressive. In three years the stock price has launched 116% higher: a great result. It's not uncommon to see a share price retrace a bit, after a big gain. Only time will tell if there is still too much optimism currently reflected in the share price.

See our latest analysis for PROS Holdings

Given that PROS Holdings 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

PROS Holdings's revenue trended up 15% each year over three years. That's pretty nice growth. It's fair to say that the market has acknowledged the growth by pushing the share price up 29% per year. It's hard to value pre-profit businesses, but it seems like the market has become a lot more optimistic about this one! It would be worth thinking about when profits will flow, since that milestone will attract more attention.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

NYSE:PRO Income Statement, November 5th 2019

PROS Holdings is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think PROS Holdings will earn in the future (free analyst consensus estimates)

A Different Perspective

It's nice to see that PROS Holdings shareholders have received a total shareholder return of 59% over the last year. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. If you would like to research PROS Holdings in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

But note: PROS Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.