Rapid7's (NASDAQ:RPD) Wonderful 613% Share Price Increase Shows How Capitalism Can Build Wealth
For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the Rapid7, Inc. (NASDAQ:RPD) share price has soared 613% over five years. And this is just one example of the epic gains achieved by some long term investors. It's down 3.2% in the last seven days.
We love happy stories like this one. The company should be really proud of that performance!
View 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. 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, Rapid7 can boast revenue growth at a rate of 24% per year. Even measured against other revenue-focussed companies, that's a good result. Fortunately, the market has not missed this, and has pushed the share price up by 48% per year in that time. It's never too late to start following a top notch stock like Rapid7, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Rapid7 is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Rapid7 in this interactive graph of future profit estimates.
A Different Perspective
It's good to see that Rapid7 has rewarded shareholders with a total shareholder return of 83% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 48% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should be aware of the 2 warning signs we've spotted with Rapid7 .
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.
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.
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