The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. That downside risk was realized by DocuSign, Inc. (NASDAQ:DOCU) shareholders over the last year, as the share price declined 27%. That contrasts poorly with the market return of 1.7%. DocuSign may have better days ahead, of course; we’ve only looked at a one year period. Furthermore, it’s down 18% in about a quarter. That’s not much fun for holders.
Given that DocuSign 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. When a company doesn’t make profits, we’d generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
DocuSign grew its revenue by 35% over the last year. That’s definitely a respectable growth rate. Meanwhile, the share price is down 27% over twelve months, which is disappointing given the progress made. This implies the market was expecting better growth. But if revenue keeps growing, then at a certain point the share price would likely follow.
DocuSign is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think DocuSign will earn in the future (free analyst consensus estimates)
A Different Perspective
While DocuSign shareholders are down 27% for the year, the market itself is up 1.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 18%, 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. Before spending more time on DocuSign it might be wise to click here to see if insiders have been buying or selling shares.
We will like DocuSign better if we see some big insider buys. While we wait, check out this free list of growing companies 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 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 email@example.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.