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Is PROS Holdings's (NYSE:PRO) 298% Share Price Increase Well Justified?

Simply Wall St

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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. To wit, the PROS Holdings, Inc. (NYSE:PRO) share price has flown 298% in the last three years. Most would be happy with that. It's also good to see the share price up 33% over the last quarter. But this move may well have been assisted by the reasonably buoyant market (up 13% in 90 days).

View our latest analysis for PROS Holdings

Because PROS Holdings is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

In the last 3 years PROS Holdings saw its revenue grow at 6.8% per year. Considering the company is losing money, we think that rate of revenue growth is uninspiring. In comparison, the share price rise of 59% per year over the last three years is pretty impressive. We'd need to take a closer look at the revenue and profit trends to see whether the improvements might justify that sort of increase. It may be that the market is pretty optimistic about PROS Holdings if you look to the bottom line.

The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).

NYSE:PRO Income Statement, April 9th 2019

Take a more thorough look at PROS Holdings's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that PROS Holdings shareholders have received a total shareholder return of 30% over one year. That gain is better than the annual TSR over five years, which is 7.3%. 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. Before spending more time on PROS Holdings it might be wise to click here to see if insiders have been buying or selling shares.

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.

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.