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Extreme Networks, Inc. (NASDAQ:EXTR) shareholders might understandably be very concerned that the share price has dropped 31% in the last quarter. But that doesn’t change the fact that the returns over the last three years have been pleasing. To wit, the share price did better than an index fund, climbing 57% during that period.
Given that Extreme Networks 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Extreme Networks’s revenue trended up 28% each year over three years. That’s well above most pre-profit companies. The share price rise of 16% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put Extreme Networks on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.
Depicted in the graphic below, you’ll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
Take a more thorough look at Extreme Networks’s financial health with this free report on its balance sheet.
A Different Perspective
Extreme Networks shareholders are down 36% for the year, but the market itself is up 3.7%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 8.9%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. You could get a better understanding of Extreme Networks’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
We will like Extreme Networks 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.