This month we saw the Upland Software, Inc. (NASDAQ:UPLD) rose a whopping 91%. But that doesn’t change the fact that the returns of the past half-decade have been stomach-churning. In fact, the stock price fell off a mountain, ending up 88% lower after that period. While the recent surge may be a green shoot, we’re certainly hesitant to rejoice. The important question is whether the company itself justifies a higher share price in the long term. We really hope that anyone who weathers this price crash has a diversified portfolio. Even if you lose money, you don’t have to lose the class.
While the shares are up 17% in the past week, but long-term shareholders are still in the red, let’s see what the fundamentals can tell us.
Check out our latest analysis for Upland Software
Upland Software isn’t currently profitable, so most analysts look at revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually demand strong sales growth. That’s because rapid revenue growth can easily be extrapolated to profit forecasts, which are often of significant size.
In five years, Upland Software grew its revenue by 4.3% per year. That’s far from impressive considering all the money it’s losing. It is not certain that the price drop of 13% per year is entirely justified, but the market is undoubtedly disappointed. While we’re certainly wary of the stock, it may be an overreaction after that kind of performance. A company like this usually needs to make a profit before it can gain favor with new investors.
The graph below shows how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We think it’s positive that insiders have made significant purchases over the past year. That said, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So we recommend that you check this out free consensus forecast report
While the broader market gained about 34% over the last year, Upland Software shareholders lost 4.6%. Even the share prices of good stocks fall sometimes, but we want to see improvements in a company’s fundamental metrics before we get too interested. However, last year’s loss is not as bad as the 13% annual losses suffered by investors over the past five years. We want clear information that the company will grow before we believe the share price will stabilize. It is always interesting to follow the price development of shares in the longer term. But to better understand Upland Software, we need to consider many other factors. Example: We’ve seen it 3 warning signs for Upland Software you have to take it into account.
Upland Software isn’t the only stock insiders are buying. For those who like to search lesser known companies 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 from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.
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