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SoundThinking, Inc. (NASDAQ:SSTI) shareholders should be happy to see the share price up 15% in the last quarter. But over the last half decade, the stock has not performed well. In fact, the share price is down 47%, which falls well short of the return you could get by buying an index fund.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
We've discovered 1 warning sign about SoundThinking. View them for free.
Because SoundThinking 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over five years, SoundThinking grew its revenue at 20% per year. That's well above most other pre-profit companies. Shareholders are no doubt disappointed with the loss of 8%, each year, in that time. So you might argue the SoundThinking should get more credit for its rather impressive revenue growth over the period. So now is probably an apt time to look closer at the stock, if you think it has potential.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling SoundThinking stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We're pleased to report that SoundThinking shareholders have received a total shareholder return of 15% over one year. That certainly beats the loss of about 8% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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 - SoundThinking has 1 warning sign we think you should be aware of.
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.