Dropsuite (ASX:DSE) shareholders have earned a 55% CAGR over the last five years

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Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. Don't believe it? Then look at the Dropsuite Limited (ASX:DSE) share price. It's 794% higher than it was five years ago. If that doesn't get you thinking about long term investing, we don't know what will. Also pleasing for shareholders was the 18% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. We love happy stories like this one. The company should be really proud of that performance!

With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.

Check out our latest analysis for Dropsuite

While Dropsuite 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. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 5 years Dropsuite saw its revenue grow at 40% per year. Even measured against other revenue-focussed companies, that's a good result. Arguably, this is well and truly reflected in the strong share price gain of 55%(per year) over the same period. Despite the strong run, top performers like Dropsuite 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.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

We know that Dropsuite has improved its bottom line over the last three years, but what does the future have in store? This free interactive report on Dropsuite's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that Dropsuite has rewarded shareholders with a total shareholder return of 46% in the last twelve months. Having said that, the five-year TSR of 55% a year, is even better. 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Dropsuite you should know about.