PROS Holdings (NYSE:PRO) adds US$101m to market cap in the past 7 days, though investors from five years ago are still down 57%

PROS Holdings, Inc. (NYSE:PRO) shareholders will doubtless be very grateful to see the share price up 42% in the last quarter. But that can't change the reality that over the longer term (five years), the returns have been really quite dismal. In fact, the share price has declined rather badly, down some 57% in that time. So we're hesitant to put much weight behind the short term increase. Of course, this could be the start of a turnaround.

While the last five years has been tough for PROS Holdings shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for PROS Holdings

Because PROS Holdings 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.

In the last half decade, PROS Holdings saw its revenue increase by 5.5% per year. That's not a very high growth rate considering it doesn't make profits. This lacklustre growth has no doubt fueled the loss of 9% per year, in that time. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in PROS Holdings. However, it's possible too many in the market will ignore it, and there may be an opportunity if it starts to recover down the track.

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

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for PROS Holdings in this interactive graph of future profit estimates.

A Different Perspective

Investors in PROS Holdings had a tough year, with a total loss of 34%, against a market gain of about 36%. 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 9% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. Take risks, for example - PROS Holdings has 3 warning signs (and 1 which can't be ignored) we think you should know about.

PROS Holdings is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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.