Exact Sciences Corporation (NASDAQ:EXAS) shareholders might be concerned after seeing the share price drop 29% in the last quarter. But that doesn't change the fact that the returns over the last three years have been spectacular. The longer term view reveals that the share price is up 373% in that period. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. Only time will tell if there is still too much optimism currently reflected in the share price.
Exact Sciences isn't a profitable company, so 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 3 years Exact Sciences saw its revenue grow at 62% per year. That's much better than most loss-making companies. And it's not just the revenue that is taking off. The share price is up 68% per year in that time. Despite the strong run, top performers like Exact Sciences have been known to go on winning for decades. So we'd recommend you take a closer look at this one, or even put it on your watchlist.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Exact Sciences is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Exact Sciences stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Exact Sciences provided a TSR of 12% over the year. That's fairly close to the broader market return. It has to be noted that the recent return falls short of the 29% shareholders have gained each year, over half a decade. Although the share price growth has slowed, the longer term story points to a business well worth watching. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
But note: Exact Sciences 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 US exchanges.
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If you spot an error that warrants correction, please contact the editor at email@example.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.