Further weakness as Guardant Health (NASDAQ:GH) drops 3.9% this week, taking three-year losses to 56%
Guardant Health, Inc. (NASDAQ:GH) shareholders will doubtless be very grateful to see the share price up 52% in the last quarter. But that is small recompense for the exasperating returns over three years. In that time, the share price dropped 56%. So the improvement may be a real relief to some. While many would remain nervous, there could be further gains if the business can put its best foot forward.
Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.
See our latest analysis for Guardant Health
Guardant Health 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 expect to see good 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 three years, Guardant Health saw its revenue grow by 23% per year, compound. That is faster than most pre-profit companies. The share price has moved in quite the opposite direction, down 16% over that time, a bad result. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for Guardant Health in this interactive graph of future profit estimates.
A Different Perspective
Guardant Health shareholders are down 26% for the year, but the broader market is up 13%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 16% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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 Guardant Health is showing 3 warning signs in our investment analysis , and 1 of those is concerning...
Guardant Health 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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