Exact Sciences (NASDAQ:EXAS) shareholders have endured a 63% loss from investing in the stock three years ago

If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the last three years have been particularly tough on longer term Exact Sciences Corporation (NASDAQ:EXAS) shareholders. So they might be feeling emotional about the 63% share price collapse, in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 51% lower in that time. Unfortunately the share price momentum is still quite negative, with prices down 27% in thirty days.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

View our latest analysis for Exact Sciences

Given that Exact Sciences 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Exact Sciences saw its revenue grow by 16% per year, compound. That's a pretty good rate of top-line growth. So some shareholders would be frustrated with the compound loss of 18% per year. To be frank we're surprised to see revenue growth and share price growth diverge so strongly. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth

Exact Sciences is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Exact Sciences stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

Investors in Exact Sciences had a tough year, with a total loss of 51%, against a market gain of about 25%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Exact Sciences better, we need to consider many other factors. Take risks, for example - Exact Sciences has 1 warning sign we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.

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

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.