Commvault Systems (NASDAQ:CVLT) pulls back 4.5% this week, but still delivers shareholders splendid 27% CAGR over 5 years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. For instance, the price of Commvault Systems, Inc. (NASDAQ:CVLT) stock is up an impressive 232% over the last five years. It's also up 21% in about a month. We note that Commvault Systems reported its financial results recently; luckily, you can catch up on the latest revenue and profit numbers in our company report.

Although Commvault Systems has shed US$346m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Commvault Systems

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the five years of share price growth, Commvault Systems moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. Indeed, the Commvault Systems share price has gained 157% in three years. Meanwhile, EPS is up 100% per year. This EPS growth is higher than the 37% average annual increase in the share price over the same three years. So you might conclude the market is a little more cautious about the stock, these days.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Commvault Systems has improved its bottom line over the last three years, but what does the future have in store? Take a more thorough look at Commvault Systems' financial health with this free report on its balance sheet.

A Different Perspective

It's good to see that Commvault Systems has rewarded shareholders with a total shareholder return of 139% in the last twelve months. That's better than the annualised return of 27% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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 - Commvault Systems has 2 warning signs (and 1 which is potentially serious) we think you should know about.

We will like Commvault Systems better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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

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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.