Stock Analysis

Imagine Holding Rapid7 (NASDAQ:RPD) Shares While The Price Zoomed 589% Higher

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NasdaqGM:RPD
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Long term investing can be life changing when you buy and hold the truly great businesses. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the Rapid7, Inc. (NASDAQ:RPD) share price has soared 589% over five years. If that doesn't get you thinking about long term investing, we don't know what will. It's also good to see the share price up 42% over the last quarter. But this could be related to the strong market, which is up 19% in the last three months.

Anyone who held for that rewarding ride would probably be keen to talk about it.

Check out our latest analysis for Rapid7

Because Rapid7 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 5 years Rapid7 saw its revenue grow at 25% 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 47% per year in that time. It's never too late to start following a top notch stock like Rapid7, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGM:RPD Earnings and Revenue Growth January 29th 2021

Rapid7 is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

It's nice to see that Rapid7 shareholders have received a total shareholder return of 46% over the last year. However, that falls short of the 47% TSR per annum it has made for shareholders, each year, over five years. 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. Take risks, for example - Rapid7 has 3 warning signs we think you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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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