Investors in Bicycle Therapeutics (NASDAQ:BCYC) have seen favorable returns of 39% over the past three years
One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Bicycle Therapeutics plc (NASDAQ:BCYC) shareholders have seen the share price rise 39% over three years, well in excess of the market return (32%, not including dividends).
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
See our latest analysis for Bicycle Therapeutics
Bicycle Therapeutics isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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 Bicycle Therapeutics saw its revenue grow at 19% per year. That's a very respectable growth rate. While the share price has done well, compounding at 12% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Keep in mind that the strength of the balance sheet impacts the options open to the company.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Bicycle Therapeutics is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Bicycle Therapeutics will earn in the future (free analyst consensus estimates)
A Different Perspective
Pleasingly, Bicycle Therapeutics' total shareholder return last year was 31%. That gain actually surpasses the 12% TSR it generated (per year) over three years. Given the track record of solid returns over varying time frames, it might be worth putting Bicycle Therapeutics on your watchlist. 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. To that end, you should learn about the 3 warning signs we've spotted with Bicycle Therapeutics (including 1 which can't be ignored) .
But note: Bicycle Therapeutics 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 American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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