When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the CareDx, Inc (NASDAQ:CDNA) share price has soared 187% in the last 1 year. Most would be very happy with that, especially in just one year! In the last week shares have slid back 1.3%. In contrast, the longer term returns are negative, since the share price is 48% lower than it was three years ago.
Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.
View our latest analysis for CareDx
Given that CareDx 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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last twelve months, CareDx’s revenue grew by 5.3%. That’s not great considering the company is losing money. So we wouldn’t have expected the share price to rise by 187%. The business will need a lot more growth to justify that increase. We’re not so sure that revenue growth is driving the market optimism about the stock.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at CareDx’s financial health with this free report on its balance sheet.
It’s nice to see that CareDx shareholders have received a total shareholder return of 187% over the last year. That certainly beats the loss of about 3% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. If you would like to research CareDx in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
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 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.
