The 23% return this week takes Pure Storage's (NYSE:PSTG) shareholders five-year gains to 101%

By
Simply Wall St
Published
August 28, 2021
NYSE:PSTG
Source: Shutterstock

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. One great example is Pure Storage, Inc. (NYSE:PSTG) which saw its share price drive 101% higher over five years. Also pleasing for shareholders was the 26% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

See our latest analysis for Pure Storage

Given that Pure Storage 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.

For the last half decade, Pure Storage can boast revenue growth at a rate of 20% per year. Even measured against other revenue-focussed companies, that's a good result. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 15% per year, compound, during the period. So it seems likely that buyers have paid attention to the strong revenue growth. Pure Storage seems like a high growth stock - so growth investors might want to add it to their watchlist.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NYSE:PSTG Earnings and Revenue Growth August 29th 2021

Pure Storage 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 Pure Storage will earn in the future (free analyst consensus estimates)

A Different Perspective

We're pleased to report that Pure Storage shareholders have received a total shareholder return of 59% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 15% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Case in point: We've spotted 3 warning signs for Pure Storage you should be aware of.

We will like Pure Storage 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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