While Zai Lab (NASDAQ:ZLAB) shareholders have made 571% in 3 years, increasing losses might now be front of mind as stock sheds 6.3% this week
It hasn't been the best quarter for Zai Lab Limited (NASDAQ:ZLAB) shareholders, since the share price has fallen 19% in that time. But over three years the performance has been really wonderful. Indeed, the share price is up a whopping 571% in that time. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. The thing to consider is whether there is still too much elation around the company's prospects. We love happy stories like this one. The company should be really proud of that performance!
While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.
View 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last 3 years Zai Lab saw its revenue grow at 110% per year. That's much better than most loss-making companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 89% per year, over the same period. It's always tempting to take profits after a share price gain like that, but high-growth companies like Zai Lab can sometimes sustain strong growth for many years. So we'd recommend you take a closer look at this one, or even put it on your watchlist.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Zai Lab is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Zai Lab in this interactive graph of future profit estimates.
A Different Perspective
We're pleased to report that Zai Lab rewarded shareholders with a total shareholder return of 62% over the last year. The TSR has been even better over three years, coming in at 89% per year. 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 2 warning signs 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. 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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