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If You Had Bought Rapid7 (NASDAQ:RPD) Shares Three Years Ago You'd Have Earned 245% Returns

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It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. For example, the Rapid7, Inc. (NASDAQ:RPD) share price has soared 245% in the last three years. That sort of return is as solid as granite. In the last week shares have slid back 4.4%.

Check out our latest analysis for Rapid7

Given that Rapid7 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years Rapid7 saw its revenue grow at 24% per year. That's much better than most loss-making companies. Meanwhile, the share price performance has been pretty solid at 51% compound over three years. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say Rapid7 is still worth investigating - successful businesses can often keep growing for long periods.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

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

Rapid7 is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Rapid7 stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

We're pleased to report that Rapid7 shareholders have received a total shareholder return of 23% over one year. Having said that, the five-year TSR of 24% a year, is even better. It's always interesting to track share price performance over the longer term. But to understand Rapid7 better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Rapid7 you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.