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Is GenMark Diagnostics' (NASDAQ:GNMK) Share Price Gain Of 186% Well Earned?

Simply Wall St

Unfortunately, investing is risky - companies can and do go bankrupt. But if you pick the right stock, you can make a lot more than 100%. For example, the GenMark Diagnostics, Inc. (NASDAQ:GNMK) share price had more than doubled in just one year - up 186%. On top of that, the share price is up 72% in about a quarter. Looking back further, the stock price is 45% higher than it was three years ago.

View our latest analysis for GenMark Diagnostics

GenMark Diagnostics wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year GenMark Diagnostics saw its revenue grow by 47%. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 186% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

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


We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. If you are thinking of buying or selling GenMark Diagnostics stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

It's nice to see that GenMark Diagnostics shareholders have received a total shareholder return of 186% over the last year. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for GenMark Diagnostics that you should be aware of before investing here.

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.

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. 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.

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