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When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of Xencor, Inc. (NASDAQ:XNCR) stock is up an impressive 218% over the last five years. On top of that, the share price is up 16% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 8.2% in 90 days).
Because Xencor 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. 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.
For the last half decade, Xencor can boast revenue growth at a rate of 25% per year. Even measured against other revenue-focussed companies, that's a good result. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 26% per year, compound, during the period. So it seems likely that buyers have paid attention to the strong revenue growth. To our minds that makes Xencor 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).
Xencor is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Xencor in this interactive graph of future profit estimates.
A Different Perspective
Xencor shareholders gained a total return of 10% during the year. Unfortunately this falls short of the market return. On the bright side, the longer term returns (running at about 26% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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 risks, for instance. Every company has them, and we've spotted 1 warning sign for Xencor you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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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