The worst outcome after buying shares in a company (assuming there is no leverage) would be if you lost all the money you invested. But on the bright side, you can earn way more than 100% on a really good deed. Long term NEXTDC Limited (ASX:NXT) shareholders would be well aware of this, as the stock has risen 145% in five years. We note that the stock price has risen 1.4% over the past seven days.

So let’s examine and see if the long-term performance of the business has been consistent with the progress of the underlying business.

Check out our latest analysis for NEXTDC

Since NEXTDC has made only minimal profits over the past twelve months, we will focus on revenue to assess its business development. Generally speaking, we would consider a stock like this alongside loss-making companies, simply because the amount of profit is so low. For shareholders to have confidence that a company will increase its profits significantly, it must increase its revenue.

Over the past 5 years, NEXTDC has seen its turnover grow by 18% per year. Even compared to other revenue-oriented companies, this is a good result. Meanwhile, its share price performance certainly reflects the strong growth, given that the share price rose 20% pa, compounded, during the period. This suggests that the market has indeed recognized the progress made by the company. In our opinion, NEXTDC is worth investigating – it could have its best days ahead of it.

You can see how revenue and earnings have changed over time in the image below (click on the graph to see the exact values).

NEXTDC is well known to investors and many smart analysts have attempted to predict future earnings levels. So it makes a lot of sense to check out what analysts think NEXTDC will gain in the future (free analyst consensus estimates)

A different perspective

While the broader market gained around 5.3% last year, NEXTDC shareholders lost 2.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long-term shareholders have made money, gaining 20% ​​a year over half a decade. It could be that the recent selloff is an opportunity, so it may be worth checking the fundamentals for signs of a long-term growth trend. While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take for example the ubiquitous specter of investment risk. We have identified 2 warning signs with NEXTDC, and understanding them should be part of your investment process.

We’ll like NEXTDC better if we see big insider buying. In the meantime, watch this free list of growing companies with significant and recent insider buying.

Please note that the market returns quoted in this article reflect the market-weighted average returns of stocks currently trading on AU exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.