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The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. Unfortunately the iRhythm Technologies, Inc. (NASDAQ:IRTC) share price slid 49% over twelve months. That's well below the market return of 41%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 30% in three years. Shareholders have had an even rougher run lately, with the share price down 35% in the last 90 days.
iRhythm Technologies 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year iRhythm Technologies saw its revenue grow by 20%. That's definitely a respectable growth rate. Unfortunately that wasn't good enough to stop the share price dropping 49%. This implies the market was expecting better growth. However, that's in the past now, and it's the future that matters most.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
iRhythm Technologies is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
Over the last year, iRhythm Technologies shareholders took a loss of 49%. In contrast the market gained about 41%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 9% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. 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. Even so, be aware that iRhythm Technologies is showing 3 warning signs in our investment analysis , you should know about...
Of course iRhythm Technologies may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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