The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Athenex, Inc. (NASDAQ:ATNX) share price is up 30% in the last year, clearly besting the market return of around 24% (not including dividends). So that should have shareholders smiling. We'll need to follow Athenex for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Athenex wasn't profitable in the last twelve months, 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Athenex saw its revenue grow by 6.6%. That's not a very high growth rate considering it doesn't make profits. In keeping with the revenue growth, the share price gained 30% in that time. That's not a standout result, but it is solid - much like the level of revenue growth. Given the market doesn't seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. You can see what analysts are predicting for Athenex in this interactive graph of future profit estimates.
A Different Perspective
Athenex shareholders have gained 30% over twelve months, which isn't far from the market return of 27%. And the stock has been on a nice little run lately, with the price climbing 51% higher in 90 days. It could be that word is spreading about its positive business attributes. It's always interesting to track share price performance over the longer term. But to understand Athenex better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Athenex (of which 1 is potentially serious!) you should know about.
Athenex is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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 email@example.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.
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