Wave Life Sciences Ltd. (NASDAQ:WVE) shareholders might be concerned after seeing the share price drop 15% in the last month. But that doesn't displace its brilliant performance over three years. Indeed, the share price is up a whopping 364% in that time. As long term investors the recent fall doesn't detract all that much from the longer term story. Only time will tell if there is still too much optimism currently reflected in the share price.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Wave Life Sciences isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years Wave Life Sciences has grown its revenue at 43% annually. That's much better than most loss-making companies. And it's not just the revenue that is taking off. The share price is up 67% per year in that time. Despite the strong run, top performers like Wave Life Sciences have been known to go on winning for decades. In fact, it might be time to put it on your watchlist, if you're not already familiar with the stock.

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

Wave Life Sciences is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Wave Life Sciences will earn in the future (free analyst consensus estimates)

A Different Perspective

It's good to see that Wave Life Sciences has rewarded shareholders with a total shareholder return of 151% in the last twelve months. That's better than the annualised return of 11% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Case in point: We've spotted 3 warning signs for Wave Life Sciences you should be aware of, and 1 of them can't be ignored.

If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.

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.