When we invest, we're generally looking for stocks that outperform the market average. And the truth is, you can make significant gains if you buy good quality businesses at the right price. For example, long term BlackLine, Inc. (NASDAQ:BL) shareholders have enjoyed a 96% share price rise over the last half decade, well in excess of the market return of around 37% (not including dividends).
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
Because BlackLine 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 does expect good top-line growth.
In the last 5 years BlackLine saw its revenue grow at 21% per year. Even measured against other revenue-focussed companies, that's a good result. It's good to see that the stock has 14%, but not entirely surprising given revenue shows strong growth. If the strong revenue growth continues, we'd expect the share price to follow, in time. Of course, you'll have to research the business more fully to figure out if this is an attractive opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
BlackLine is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling BlackLine stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
While the broader market lost about 19% in the twelve months, BlackLine shareholders did even worse, losing 33%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 14%, each year, over five years. 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 BlackLine better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for BlackLine (of which 1 shouldn't be ignored!) you should know about.
Of course BlackLine may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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