PagerDuty (NYSE:PD investor three-year losses grow to 41% as the stock sheds US$116m this past week

PagerDuty, Inc. (NYSE:PD) shareholders should be happy to see the share price up 16% in the last quarter. But that doesn't help the fact that the three year return is less impressive. After all, the share price is down 41% in the last three years, significantly under-performing the market.

After losing 6.0% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

See our latest analysis for PagerDuty

Because PagerDuty made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 would hope for good top-line growth to make up for the lack of earnings.

Over three years, PagerDuty grew revenue at 18% per year. That's a pretty good rate of top-line growth. Shareholders have seen the share price fall at 12% per year, for three years. This implies the market had higher expectations of PagerDuty. However, that's in the past now, and it's the future is more important - and the future looks brighter (based on revenue, anyway).

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

PagerDuty 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 PagerDuty will earn in the future (free analyst consensus estimates)

A Different Perspective

Investors in PagerDuty had a tough year, with a total loss of 9.7%, against a market gain of about 31%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 3% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. To that end, you should be aware of the 1 warning sign we've spotted with PagerDuty .

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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