Investors can approximate the average market return by buying an index fund. Active investors aim to buy stocks that vastly outperform the market – but in the process, they risk under-performance. Investors in Nutanix, Inc. (NASDAQ:NTNX) have tasted that bitter downside in the last year, as the share price dropped 18%. That contrasts poorly with the market return of 9.9%. Nutanix hasn’t been listed for long, so although we’re wary of recent listings that perform poorly, it may still prove itself with time. Furthermore, it’s down 15% in about a quarter. That’s not much fun for holders.
Given that Nutanix 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. 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 twelve months, Nutanix increased its revenue by 22%. We think that is pretty nice growth. Meanwhile, the share price is down 18% over twelve months, which is disappointing given the progress made. You might even wonder if the share price was previously over-hyped. However, that’s in the past now, and it’s the future that matters most.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
Nutanix is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
Given that the market gained 9.9% in the last year, Nutanix shareholders might be miffed that they lost 18%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 15% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
We will like Nutanix 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 firstname.lastname@example.org. 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.