Is iRhythm Technologies' (NASDAQ:IRTC) Share Price Gain Of 131% Well Earned?

Some iRhythm Technologies, Inc. (NASDAQ:IRTC) shareholders are probably rather concerned to see the share price fall 38% over the last three months. But that doesn't change the fact that the returns over the last three years have been very strong. In three years the stock price has launched 131% higher: a great result. To some, the recent share price pullback wouldn't be surprising after such a good run. The thing to consider is whether the underlying business is doing well enough to support the current price.

View our latest analysis for iRhythm Technologies

Because iRhythm Technologies made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last 3 years iRhythm Technologies saw its revenue grow at 31% per year. That's well above most pre-profit companies. Along the way, the share price gained 32% per year, a solid pop by our standards. But it does seem like the market is paying attention to strong revenue growth. That's not to say we think the share price is too high. In fact, it might be worth keeping an eye on this one.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

If you are thinking of buying or selling iRhythm Technologies stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Pleasingly, iRhythm Technologies' total shareholder return last year was 95%. That's better than the annualized TSR of 32% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that iRhythm Technologies is showing 4 warning signs in our investment analysis , and 1 of those can't be ignored...

Of course iRhythm Technologies may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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. 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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