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Investors one-year losses grow to 78% as the stock sheds US$94m this past week

Editas Medicine, Inc. (NASDAQ:EDIT) shareholders should be happy to see the share price up 27% in the last quarter. But that hardly compensates for the shocking decline over the last twelve months. To wit, the stock has dropped 78% over the last year. It's not uncommon to see a bounce after a drop like that. The real question is whether the company can turn around its fortunes.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

See our latest analysis for Editas Medicine

Editas Medicine wasn't profitable in the last twelve months, 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In just one year Editas Medicine saw its revenue fall by 61%. That looks like a train-wreck result to investors far and wide. The market didn't mess around, sending shares down the garbage shute. (Or down 78% to be specific). Our mindset doesn't have a lot of time for stocks like this. While some losers redeem themselves, most remain losers and we prefer winners anyway.

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

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

A Different Perspective

While the broader market lost about 17% in the twelve months, Editas Medicine shareholders did even worse, losing 78%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Editas Medicine (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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