We think all investors should try to buy and hold high quality multi-year winners. And highest quality companies can see their share prices grow by huge amounts. Just think about the savvy investors who held HubSpot, Inc. (NYSE:HUBS) shares for the last five years, while they gained 314%. If that doesn't get you thinking about long term investing, we don't know what will. Also pleasing for shareholders was the 35% gain in the last three months.
While the stock has fallen 3.4% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
Given that HubSpot 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 desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
In the last 5 years HubSpot saw its revenue grow at 27% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 33% per year in that time. Despite the strong run, top performers like HubSpot have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
HubSpot is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
HubSpot shareholders have received returns of 27% over twelve months, which isn't far from the general market return. We should note here that the five-year TSR is more impressive, at 33% per year. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes HubSpot a stock worth watching. It's always interesting to track share price performance over the longer term. But to understand HubSpot better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with HubSpot .
But note: HubSpot may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.