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It might be of some concern to shareholders to see the CyberArk Software Ltd. (NASDAQ:CYBR) share price down 13% in the last month. But that doesn't change the fact that the returns over the last five years have been respectable. It's good to see the share price is up 83% in that time, better than its market return of 80%.
Although CyberArk Software has shed US$623m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
See our latest analysis for CyberArk Software
Because CyberArk Software 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 5 years CyberArk Software saw its revenue grow at 13% per year. That's a fairly respectable growth rate. While the share price has beat the market, compounding at 13% yearly, over five years, there's certainly some potential that the market hasn't fully considered the growth track record. The key question is whether revenue growth will slow down, and if so, how quickly. Lack of earnings means you have to project further into the future justify the valuation on the basis of future free cash flow.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. If you are thinking of buying or selling CyberArk Software stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
We're pleased to report that CyberArk Software shareholders have received a total shareholder return of 68% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 13% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with CyberArk Software , and understanding them should be part of your investment process.