While not a mind-blowing move, it is good to see that the New Relic, Inc. (NYSE:NEWR) share price has gained 22% in the last three months. But that doesn't change the reality of under-performance over the last twelve months. After all, the share price is down 28% in the last year, significantly under-performing the market.
If the past week is anything to go by, investor sentiment for New Relic isn't positive, so let's see if there's a mismatch between fundamentals and the share price.
Check out our latest analysis for New Relic
Because New Relic 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year New Relic saw its revenue grow by 20%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 28%. You might even wonder if the share price was previously over-hyped. However, that's in the past now, and it's the future that matters most.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
New Relic is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for New Relic in this interactive graph of future profit estimates.
A Different Perspective
We regret to report that New Relic shareholders are down 28% for the year. Unfortunately, that's worse than the broader market decline of 18%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 4% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand New Relic better, we need to consider many other factors. For example, we've discovered 2 warning signs for New Relic that you should be aware of before investing here.
We will like New Relic better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.