U.S. Markets closed
  • S&P 500

    3,678.43
    +92.81 (+2.59%)
     
  • Dow 30

    29,490.89
    +765.38 (+2.66%)
     
  • Nasdaq

    10,815.43
    +239.83 (+2.27%)
     
  • Russell 2000

    1,708.87
    +44.15 (+2.65%)
     
  • Crude Oil

    83.34
    -0.29 (-0.35%)
     
  • Gold

    1,710.50
    +8.50 (+0.50%)
     
  • Silver

    20.81
    +0.22 (+1.07%)
     
  • EUR/USD

    0.9832
    +0.0031 (+0.3146%)
     
  • 10-Yr Bond

    3.6510
    -0.1530 (-4.02%)
     
  • Vix

    30.10
    -1.52 (-4.81%)
     
  • GBP/USD

    1.1327
    +0.0161 (+1.4442%)
     
  • USD/JPY

    144.5200
    -0.2090 (-0.1444%)
     
  • BTC-USD

    19,534.98
    +324.98 (+1.69%)
     
  • CMC Crypto 200

    444.05
    +8.70 (+2.00%)
     
  • FTSE 100

    6,908.76
    +14.95 (+0.22%)
     
  • Nikkei 225

    26,215.79
    +278.59 (+1.07%)
     

SentinelOne (NYSE:S) adds US$929m to market cap in the past 7 days, though investors from a year ago are still down 46%

·3 min read

SentinelOne, Inc. (NYSE:S) shareholders should be happy to see the share price up 19% in the last month. But that doesn't change the reality of under-performance over the last twelve months. In fact, the price has declined 46% in a year, falling short of the returns you could get by investing in an index fund.

While the last year has been tough for SentinelOne shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for SentinelOne

Given that SentinelOne 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. 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 year SentinelOne saw its revenue grow by 118%. That's a strong result which is better than most other loss making companies. The share price drop of 46% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
earnings-and-revenue-growth

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for SentinelOne in this interactive graph of future profit estimates.

A Different Perspective

SentinelOne shareholders are down 46% for the year, even worse than the market loss of 16%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 21%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Take risks, for example - SentinelOne has 3 warning signs we think you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here