Active investing isn't easy, but for those that do it, the aim is to find the best companies to buy, and to profit handsomely. When you find (and hold) a big winner, you can markedly improve your finances. For example, Fastly, Inc. (NYSE:FSLY) has generated a beautiful 345% return in just a single year. On top of that, the share price is up 31% in about a quarter. Fastly hasn't been listed for long, so it's still not clear if it is a long term winner.
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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Fastly grew its revenue by 46% last year. That's well above most other pre-profit companies. But the share price has really rocketed in response gaining 345% as previously mentioned. Even the most bullish shareholders might be thinking that the share price might drop back a bit, after a gain like that. So this looks like a great watchlist candidate for investors who look for high growth inflexion points.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Fastly stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Fastly shareholders should be happy with the total gain of 345% over the last twelve months. That's better than the more recent three month gain of 31%, implying that share price has plateaued recently. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 5 warning signs for Fastly (1 is significant!) that you should be aware of before investing here.
We will like Fastly 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.
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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. 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.
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