Announcing: Xero (ASX:XRO) Stock Soared An Exciting 868% In The Last Five Years

Xero Limited (ASX:XRO) shareholders might be concerned after seeing the share price drop 16% in the last month. But over five years returns have been remarkably great. Indeed, the share price is up a whopping 868% in that time. So we don't think the recent decline in the share price means its story is a sad one. Only time will tell if there is still too much optimism currently reflected in the share price.

It really delights us to see such great share price performance for investors.

Check out our latest analysis for Xero

We don't think that Xero's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last 5 years Xero saw its revenue grow at 29% per year. Even measured against other revenue-focussed companies, that's a good result. Arguably, this is well and truly reflected in the strong share price gain of 57%(per year) over the same period. It's never too late to start following a top notch stock like Xero, since some long term winners go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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. If you are thinking of buying or selling Xero stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

It's good to see that Xero has rewarded shareholders with a total shareholder return of 46% in the last twelve months. Having said that, the five-year TSR of 57% a year, is even better. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that Xero is showing 3 warning signs in our investment analysis , you should know about...

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 AU exchanges.

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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. 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.
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