Strong week for Guardant Health (NASDAQ:GH) shareholders doesn't alleviate pain of three-year loss

Guardant Health, Inc. (NASDAQ:GH) shareholders will doubtless be very grateful to see the share price up 61% in the last month. But that is small recompense for the exasperating returns over three years. Indeed, the share price is down a tragic 61% in the last three years. So it is really good to see an improvement. Perhaps the company has turned over a new leaf.

The recent uptick of 8.6% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for Guardant Health

Given that Guardant Health 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, Guardant Health saw its revenue grow by 22% per year, compound. That's well above most other pre-profit companies. In contrast, the share price is down 17% compound, over three years - disappointing by most standards. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Guardant Health in this interactive graph of future profit estimates.

A Different Perspective

It's nice to see that Guardant Health shareholders have received a total shareholder return of 48% over the last year. Notably the five-year annualised TSR loss of 8% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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. Case in point: We've spotted 4 warning signs for Guardant Health you should be aware of, and 1 of them is a bit concerning.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

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.