Fastly, Inc. (NYSE:FSLY) shareholders should be happy to see the share price up 26% in the last month. But that is minimal compensation for the share price under-performance over the last year. In fact the stock is down 31% in the last year, well below the market return.
Fastly 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last twelve months, Fastly increased its revenue by 44%. That's definitely a respectable growth rate. Meanwhile, the share price is down 31% over twelve months, which is disappointing given the progress made. This implies the market was expecting better growth. However, that's in the past now, and it's the future that matters most.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Fastly 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 Fastly will earn in the future (free analyst consensus estimates)
A Different Perspective
Given that the market gained 44% in the last year, Fastly shareholders might be miffed that they lost 31%. 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. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. For instance, we've identified 4 warning signs for Fastly that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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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