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Did Guardant Health's (NASDAQ:GH) Share Price Deserve to Gain 49%?

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Guardant Health, Inc. (NASDAQ:GH) shareholders might be concerned after seeing the share price drop 22% in the last quarter. But over the last year the share price action has been satisfactory. We say this because the stock (which is up 49%) actually surpassed the market return of (44%).

View our latest analysis for Guardant Health

Guardant Health isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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 year Guardant Health saw its revenue grow by 21%. We respect that sort of growth, no doubt. While the share price performed well, gaining 49% over twelve months, you could argue the revenue growth warranted it. If revenue stays on trend, there may be plenty more share price gains to come. But it's crucial to check profitability and cash flow before forming a view on the future.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

earnings-and-revenue-growth
earnings-and-revenue-growth

Guardant Health is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Guardant Health will earn in the future (free analyst consensus estimates)

A Different Perspective

In the last year the market returned about 44%, and Guardant Health generated a TSR of 49% for its shareholders. Unfortunately the share price is down 22% over the last quarter. It may simply be that the share price got ahead of itself, although you might want to check for any weak results. 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. Even so, be aware that Guardant Health is showing 3 warning signs in our investment analysis , you should know about...

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.

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

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