Generally speaking the aim of active stock picking is to find companies that provide returns that are superior to the market average. Buying under-rated businesses is one path to excess returns. To wit, the Five9 share price has climbed 98% in five years, easily topping the market return of 67% (ignoring dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 17% in the last year.

Since it's been a strong week for Five9 shareholders, let's have a look at trend of the longer term fundamentals.

View our latest analysis for Five9

Given that Five9 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

For the last half decade, Five9 can boast revenue growth at a rate of 26% per year. That's well above most pre-profit companies. While the compound gain of 15% per year is good, it's not unreasonable given the strong revenue growth. If the strong revenue growth continues, we'd expect the share price to follow, in time. Opportunity lies where the market hasn't fully priced growth in the underlying business.

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

Five9 is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Five9 stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

It's good to see that Five9 has rewarded shareholders with a total shareholder return of 17% in the last twelve months. That's better than the annualised return of 15% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Five9 has 3 warning signs we think you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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.