While it may not be enough for some shareholders, we think it is good to see the ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) share price up 12% in a single quarter. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 30% in the last three years, significantly under-performing the market.
ACADIA Pharmaceuticals isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years, ACADIA Pharmaceuticals saw its revenue grow by 99% per year, compound. That is faster than most pre-profit companies. The share price drop of 11% 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. Before considering a purchase, investors should consider how quickly expenses are growing, relative to revenue.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
ACADIA Pharmaceuticals is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
It's good to see that ACADIA Pharmaceuticals has rewarded shareholders with a total shareholder return of 20% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 2.8% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies 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 US exchanges.
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