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Is Cara Therapeutics' (NASDAQ:CARA) Share Price Gain Of 171% Well Earned?

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Simply Wall St
·3 min read
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. Long term Cara Therapeutics, Inc. (NASDAQ:CARA) shareholders would be well aware of this, since the stock is up 171% in five years. It's also good to see the share price up 29% over the last quarter. But this could be related to the strong market, which is up 15% in the last three months.

Check out our latest analysis for Cara Therapeutics

Given that Cara Therapeutics didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. 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.

For the last half decade, Cara Therapeutics can boast revenue growth at a rate of 58% per year. Even measured against other revenue-focussed companies, that's a good result. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 22% per year, in that time. So it seems likely that buyers have paid attention to the strong revenue growth. To our minds that makes Cara Therapeutics worth investigating - it may have its best days ahead.

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

earnings-and-revenue-growth
earnings-and-revenue-growth

Take a more thorough look at Cara Therapeutics' financial health with this free report on its balance sheet.

A Different Perspective

Cara Therapeutics shareholders are up 17% for the year. But that return falls short of the market. On the bright side, the longer term returns (running at about 22% a year, over half a decade) look better. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Cara Therapeutics better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Cara Therapeutics you should be aware of.

Of course Cara Therapeutics may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

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. 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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