Extreme Networks (NASDAQ:EXTR) shareholders are still up 117% over 5 years despite pulling back 3.4% in the past week

Extreme Networks, Inc. (NASDAQ:EXTR) shareholders might be concerned after seeing the share price drop 23% in the last month. But that doesn't change the fact that the returns over the last five years have been very strong. It's fair to say most would be happy with 117% the gain in that time. To some, the recent pullback wouldn't be surprising after such a fast rise. Of course, that doesn't necessarily mean it's cheap now.

Since the long term performance has been good but there's been a recent pullback of 3.4%, let's check if the fundamentals match the share price.

See our latest analysis for Extreme Networks

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the five years of share price growth, Extreme Networks moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Extreme Networks has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Extreme Networks stock, you should check out this FREEdetailed report on its balance sheet.

A Different Perspective

It's nice to see that Extreme Networks shareholders have received a total shareholder return of 49% over the last year. That gain is better than the annual TSR over five years, which is 17%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Extreme Networks better, we need to consider many other factors. For example, we've discovered 4 warning signs for Extreme Networks that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: insiders have been buying them).

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 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.