Palo Alto Networks (NASDAQ:PANW) shareholders have earned a 51% CAGR over the last three years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Palo Alto Networks, Inc. (NASDAQ:PANW) share price has soared 244% in the last three years. That sort of return is as solid as granite. Also pleasing for shareholders was the 42% gain in the last three months.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

See our latest analysis for Palo Alto Networks

While Palo Alto Networks made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years Palo Alto Networks has grown its revenue at 23% annually. That's much better than most loss-making companies. Along the way, the share price gained 51% per year, a solid pop by our standards. This suggests the market has recognized the progress the business has made, at least to a significant degree. Nonetheless, we'd say Palo Alto Networks is still worth investigating - successful businesses can often keep growing for long periods.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Palo Alto Networks is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Palo Alto Networks stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

While it's never nice to take a loss, Palo Alto Networks shareholders can take comfort that their trailing twelve month loss of 6.2% wasn't as bad as the market loss of around 11%. Longer term investors wouldn't be so upset, since they would have made 26%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to 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. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Palo Alto Networks you should know about.

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.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.

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