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For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. To wit, the ArQule, Inc. (NASDAQ:ARQL) share price has soared 346% over five years. This just goes to show the value creation that some businesses can achieve. Also pleasing for shareholders was the 30% gain in the last three months.
ArQule 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
For the last half decade, ArQule can boast revenue growth at a rate of 12% per year. That's a fairly respectable growth rate. Arguably it's more than reflected in the very strong share price gain of 35% a year over a half a decade. It might not be cheap but a (long-term) growth stock like this is usually well worth taking a closer look at.
The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.
This free interactive report on ArQule's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that ArQule shareholders have received a total shareholder return of 22% over the last year. Having said that, the five-year TSR of 35% a year, is even better. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. You could get a better understanding of ArQule's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.