The five-year returns have been strong for Veracyte (NASDAQ:VCYT) shareholders despite underlying losses increasing
It hasn't been the best quarter for Veracyte, Inc. (NASDAQ:VCYT) shareholders, since the share price has fallen 14% in that time. But that doesn't change the fact that the returns over the last five years have been very strong. In fact, the share price is 266% higher today. So while it's never fun to see a share price fall, it's important to look at a longer time horizon. Of course, that doesn't necessarily mean it's cheap now.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
View our latest analysis for Veracyte
Veracyte isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
In the last 5 years Veracyte saw its revenue grow at 29% per year. Even measured against other revenue-focussed companies, that's a good result. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 30% per year, in that time. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes Veracyte worth investigating - it may have its best days ahead.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Veracyte in this interactive graph of future profit estimates.
A Different Perspective
While it's never nice to take a loss, Veracyte shareholders can take comfort that their trailing twelve month loss of 1.3% wasn't as bad as the market loss of around 6.1%. Longer term investors wouldn't be so upset, since they would have made 30%, each year, over five years. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. 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. Even so, be aware that Veracyte is showing 1 warning sign in our investment analysis , you should know about...
Veracyte is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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.
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