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Can You Imagine How Jubilant Zai Lab's (NASDAQ:ZLAB) Shareholders Feel About Its 132% Share Price Gain?

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Simply Wall St
·3 min read
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Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example Zai Lab Limited (NASDAQ:ZLAB). Its share price is already up an impressive 132% in the last twelve months. On top of that, the share price is up 14% in about a quarter. But this could be related to the strong market, which is up 12% in the last three months. Zai Lab hasn't been listed for long, so it's still not clear if it is a long term winner.

Check out our latest analysis for Zai Lab

Zai Lab 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last twelve months, Zai Lab's revenue grew by 699%. That's a head and shoulders above most loss-making companies. Meanwhile, the market has paid attention, sending the share price soaring 132% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

This free interactive report on Zai Lab's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Zai Lab boasts a total shareholder return of 132% for the last year. The more recent returns haven't been as impressive as the longer term returns, coming in at just 14%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). 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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Zai Lab you should know about.

We will like Zai Lab better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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.