Arlo Technologies, Inc. (NYSE:ARLO) shareholders might be concerned after seeing the share price drop 23% in the last month. But over three years, the returns would have left most investors smiling In fact, the company's share price bested the return of its market index in that time, posting a gain of 45%.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
Given that Arlo Technologies 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over the last three years Arlo Technologies has grown its revenue at 8.8% annually. That's pretty nice growth. The share price gain of 13% per year shows that the market is paying attention to this growth. Of course, valuation is quite sensitive to the rate of growth. Of course, it's always worth considering funding risks when a company isn't profitable.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling Arlo Technologies stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
With a loss of 20% in the last year, Arlo Technologies' returns haven't been too far from the market return of -19%. Looking back further paints a different picture, with the stock returning 13% per year over three years. It could be worth doing some further research, because it may be that the long term future remains bright (and the lower share price an opportunity). It's always interesting to track share price performance over the longer term. But to understand Arlo Technologies better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Arlo Technologies .
Arlo Technologies is not the only stock that insiders are buying. 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.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
