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Some Extreme Networks, Inc. (NASDAQ:EXTR) shareholders are probably rather concerned to see the share price fall 35% over the last three months. But that doesn't change the fact that shareholders have received really good returns over the last five years. We think most investors would be happy with the 267% return, over that period. To some, the recent pullback wouldn't be surprising after such a fast rise. Of course, that doesn't necessarily mean it's cheap now.
Since the long term performance has been good but there's been a recent pullback of 4.0%, let's check if the fundamentals match the share price.
We check all companies for important risks. See what we found for Extreme Networks in our free report.
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 hope to see good revenue growth. 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 5 years Extreme Networks saw its revenue grow at 5.0% per year. Put simply, that growth rate fails to impress. So we wouldn't have expected to see the share price to have lifted 30% for each year during that time, but that's what happened. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. Some might suggest that the sentiment around the stock is rather positive.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Extreme Networks shareholders are up 6.1% for the year. But that return falls short of the market. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 30% over five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. Before spending more time on Extreme Networks it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.