Castle Biosciences (NASDAQ:CSTL) shareholders have endured a 26% loss from investing in the stock three years ago

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Castle Biosciences, Inc. (NASDAQ:CSTL) shareholders have had that experience, with the share price dropping 26% in three years, versus a market return of about 49%. Shareholders have had an even rougher run lately, with the share price down 17% in the last 90 days.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

Check out our latest analysis for Castle Biosciences

Because Castle Biosciences made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, Castle Biosciences grew revenue at 31% per year. That is faster than most pre-profit companies. The share price drop of 8% per year over three years would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. It seems likely that actual growth fell short of shareholders' expectations. Still, with high hopes now tempered, now might prove to be an opportunity to buy.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

If you are thinking of buying or selling Castle Biosciences stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Castle Biosciences shareholders are down 7.3% over twelve months, which isn't far from the market return of -6.7%. Looking back further, the company has lost shareholders 8% a year for three years. While the losses seem to be slowing, that's not really particularly comforting. 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. Take risks, for example - Castle Biosciences has 2 warning signs we think you should be aware of.

We will like Castle Biosciences better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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.

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