Editas Medicine (NASDAQ:EDIT) Shareholders Booked A 90% Gain In The Last Three Years

Simply Wall St

By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Editas Medicine, Inc. (NASDAQ:EDIT), which is up 90%, over three years, soundly beating the market return of 38% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 40%.

View our latest analysis for Editas Medicine

Editas Medicine isn't a profitable company, so 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Editas Medicine saw its revenue grow at 48% per year. That's well above most pre-profit companies. The share price rise of 24% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. So now might be the perfect time to put Editas Medicine on your radar. If the company is trending towards profitability then it could be very interesting.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

NasdaqGS:EDIT Income Statement, December 19th 2019
NasdaqGS:EDIT Income Statement, December 19th 2019

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Editas Medicine

A Different Perspective

Pleasingly, Editas Medicine's total shareholder return last year was 40%. That's better than the annualized TSR of 24% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting Editas Medicine on your watchlist. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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