For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. For example, the Exact Sciences Corporation (NASDAQ:EXAS) share price is up a whopping 978% in the last half decade, a handsome return for long term holders. This just goes to show the value creation that some businesses can achieve. Also pleasing for shareholders was the 13% gain in the last three months. But this could be related to the strong market, which is up 6.3% in the last three months.
Anyone who held for that rewarding ride would probably be keen to talk about it.
Exact Sciences isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
For the last half decade, Exact Sciences can boast revenue growth at a rate of 58% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 61% per year in that time. Despite the strong run, top performers like Exact Sciences have been known to go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Exact Sciences is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Exact Sciences will earn in the future (free analyst consensus estimates)
A Different Perspective
Exact Sciences provided a TSR of 18% over the year. That's fairly close to the broader market return. It has to be noted that the recent return falls short of the 61% shareholders have gained each year, over half a decade. More recently, the share price growth has slowed. But it has to be said the overall picture is one of good long term and short term performance. Arguably that makes Exact Sciences a stock worth watching. It's always interesting to track share price performance over the longer term. But to understand Exact Sciences better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Exact Sciences , and understanding them should be part of your investment process.
If you like to buy stocks alongside management, then you might just love this free list 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. 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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