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Did The Underlying Business Drive Eastwood Bio-Medical Canada's (CVE:EBM) Lovely 500% Share Price Gain?

Simply Wall St

Some Eastwood Bio-Medical Canada Inc. (CVE:EBM) shareholders are probably rather concerned to see the share price fall 41% over the last three months. But that doesn't displace its brilliant performance over three years. In fact, the share price has taken off in that time, up 500%. As long term investors the recent fall doesn't detract all that much from the longer term story. The share price action could signify that the business itself is dramatically improved, in that time.

View our latest analysis for Eastwood Bio-Medical Canada

Given that Eastwood Bio-Medical Canada 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. Shareholders of unprofitable companies usually expect strong revenue growth. 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.

Over the last three years Eastwood Bio-Medical Canada has grown its revenue at 21% annually. That's much better than most loss-making companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 82% per year, over the same period. Despite the strong run, top performers like Eastwood Bio-Medical Canada have been known to go on winning for decades. In fact, it might be time to put it on your watchlist, if you're not already familiar with the stock.

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

TSXV:EBM Income Statement, August 22nd 2019

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Eastwood Bio-Medical Canada's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

The last twelve months weren't great for Eastwood Bio-Medical Canada shares, which performed worse than the market, costing holders 4.0%. The market shed around 0.7%, no doubt weighing on the stock price. Investors are up over three years, booking 82% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

But note: Eastwood Bio-Medical Canada may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.