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Did Albireo Pharma's (NASDAQ:ALBO) Share Price Deserve to Gain 81%?

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Simply Wall St
·3 min read
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Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. To wit, the Albireo Pharma, Inc. (NASDAQ:ALBO) share price is 81% higher than it was a year ago, much better than the market return of around 23% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Having said that, the longer term returns aren't so impressive, with stock gaining just 23% in three years.

See our latest analysis for Albireo Pharma

Because Albireo Pharma 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last twelve months, Albireo Pharma's revenue grew by 213%. That's a head and shoulders above most loss-making companies. While the share price gain of 81% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. If that's the case, now might be the time to take a close look at Albireo Pharma. Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

Take a more thorough look at Albireo Pharma's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Albireo Pharma rewarded shareholders with a total shareholder return of 81% over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 7%. Given the track record of solid returns over varying time frames, it might be worth putting Albireo Pharma on your watchlist. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Albireo Pharma , and understanding them should be part of your investment process.

But note: Albireo Pharma may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.