Cloudflare's (NYSE:NET) investors will be pleased with their massive 405% return over the last five years

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Long term investing can be life changing when you buy and hold the truly great businesses. And we've seen some truly amazing gains over the years. To wit, the Cloudflare, Inc. (NYSE:NET) share price has soared 405% over five years. And this is just one example of the epic gains achieved by some long term investors. It's down 1.6% in the last seven days.

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

View our latest analysis for Cloudflare

Cloudflare isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

For the last half decade, Cloudflare can boast revenue growth at a rate of 34% per year. That's well above most pre-profit companies. Arguably, this is well and truly reflected in the strong share price gain of 38%(per year) over the same period. Despite the strong run, top performers like Cloudflare have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NYSE:NET Earnings and Revenue Growth November 16th 2024

Cloudflare is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Cloudflare shareholders are up 23% for the year. But that return falls short of the market. On the bright side, the longer term returns (running at about 38% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Cloudflare better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Cloudflare , and understanding them should be part of your investment process.

We will like Cloudflare better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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