By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, NEXTDC Limited (ASX:NXT) shareholders have seen the share price rise 86% over three years, well in excess of the market return (30%, not including dividends).

Since the long term performance has been good but there's been a recent pullback of 3.1%, let's check if the fundamentals match the share price.

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NEXTDC wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years NEXTDC saw its revenue grow at 12% per year. That's a very respectable growth rate. While the share price has done well, compounding at 23% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Of course, it's always worth considering funding risks when a company isn't profitable.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).ASX:NXT Earnings and Revenue Growth October 5th 2025

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think NEXTDC will earn in the future (free profit forecasts).

What About The Total Shareholder Return (TSR)?

We've already covered NEXTDC's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. We note that NEXTDC's TSR, at 90% is higher than its share price return of 86%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

NEXTDC shareholders are down 4.6% for the year, but the market itself is up 14%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 6%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand NEXTDC better, we need to consider many other factors. For example, we've discovered 2 warning signs for NEXTDC (1 is potentially serious!) that you should be aware of before investing here.

Story Continues

NEXTDC is not the only stock that insiders are buying. For those who like to find lesser know companies this freelist of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian 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.

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