There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But if when you choose to buy stocks, some of them will be below average performers. Unfortunately for shareholders, while the Zuora, Inc. (NYSE:ZUO) share price is up 41% in the last year, that falls short of the market return. In contrast, the longer term returns are negative, since the share price is 33% lower than it was three years ago.
Zuora 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.
Over the last twelve months, Zuora's revenue grew by 9.1%. That's not great considering the company is losing money. It's probably fair to say that the modest growth is reflected in the modest share price gain of 41%. It might be worth thinking about how long it will take the company to turn a profit.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
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 Zuora stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Zuora shareholders have gained 41% over twelve months. This isn't far from the market return of 45%. Given the three-year TSR of 10% per year, shareholders probably aren't too concerned by the recent gain! The optimist would say that this might be the dawn of a brighter future. 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. To that end, you should be aware of the 2 warning signs we've spotted with Zuora .
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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