While shareholders of GDS Holdings (NASDAQ:GDS) are in the black over 5 years, those who bought a week ago aren't so fortunate

It hasn't been the best quarter for GDS Holdings Limited (NASDAQ:GDS) shareholders, since the share price has fallen 14% in that time. But that doesn't undermine the fantastic longer term performance (measured over five years). In that time, the share price has soared some 435% higher! Arguably, the recent fall is to be expected after such a strong rise. The most important thing for savvy investors to consider is whether the underlying business can justify the share price gain. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 41% decline over the last twelve months.

Although GDS Holdings has shed CN¥536m 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 GDS Holdings

GDS Holdings wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, GDS Holdings can boast revenue growth at a rate of 37% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 40% per year in that time. Despite the strong run, top performers like GDS Holdings have been known to go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

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

GDS Holdings is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for GDS Holdings in this interactive graph of future profit estimates.

A Different Perspective

GDS Holdings shareholders are down 41% for the year, but the market itself is up 20%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 40%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand GDS Holdings better, we need to consider many other factors. Even so, be aware that GDS Holdings is showing 1 warning sign in our investment analysis , you should know about...

Of course GDS Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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