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Establishment Labs Holdings (NASDAQ:ESTA) shareholders have earned a 47% CAGR over the last three years

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 Establishment Labs Holdings Inc. (NASDAQ:ESTA) share price has flown 217% in the last three years. How nice for those who held the stock! In the last week shares have slid back 1.5%.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

Check out our latest analysis for Establishment Labs Holdings

Given that Establishment Labs Holdings 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Establishment Labs Holdings' revenue trended up 21% each year over three years. That's well above most pre-profit companies. Meanwhile, the share price performance has been pretty solid at 47% compound over three years. This suggests the market has recognized the progress the business has made, at least to a significant degree. Nonetheless, we'd say Establishment Labs Holdings is still worth investigating - successful businesses can often keep growing for long periods.

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

earnings-and-revenue-growth
earnings-and-revenue-growth

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling Establishment Labs Holdings stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

With a loss of 19% in the last year, Establishment Labs Holdings' returns haven't been too far from the market return of -19%. Looking back further paints a different picture, with the stock returning 47% per year over three years. It could be worth doing some further research, because it may be that the long term future remains bright (and the lower share price an opportunity). 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Establishment Labs Holdings , and understanding them should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. You probably do 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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