This month, we saw the CytomX Therapeutics, Inc. (NASDAQ:CTMX) up an impressive 32%. But in truth the last year hasn't been good for the share price. In fact, the price has declined 45% in a year, falling short of the returns you could get by investing in an index fund.
CytomX Therapeutics 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year CytomX Therapeutics saw its revenue fall by 19%. That's not what investors generally want to see. The stock price has languished lately, falling 45% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. We think most holders must believe revenue growth will improve, or else costs will decline.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
CytomX Therapeutics is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think CytomX Therapeutics will earn in the future (free analyst consensus estimates)
A Different Perspective
The last twelve months weren't great for CytomX Therapeutics shares, which cost holders 45%, while the market was up about 31%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 8.2% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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