Those who invested in Wave Life Sciences (NASDAQ:WVE) three years ago are up 195%

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. To wit, the Wave Life Sciences Ltd. (NASDAQ:WVE) share price has flown 195% in the last three years. That sort of return is as solid as granite. Also pleasing for shareholders was the 132% gain in the last three months.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

Check out our latest analysis for Wave Life Sciences

Wave Life 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

Wave Life Sciences' revenue trended up 56% each year over three years. That's well above most pre-profit companies. Meanwhile, the share price performance has been pretty solid at 43% compound over three years. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say Wave Life Sciences is still worth investigating - successful businesses can often keep growing for long periods.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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

A Different Perspective

It's nice to see that Wave Life Sciences shareholders have received a total shareholder return of 170% over the last year. Notably the five-year annualised TSR loss of 8% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand Wave Life 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 Wave Life Sciences (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.