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Does FibroGen's (NASDAQ:FGEN) Share Price Gain of 53% Match Its Business Performance?

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Simply Wall St
·3 min read
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The main point of investing for the long term is to make money. Better yet, you'd like to see the share price move up more than the market average. But FibroGen, Inc. (NASDAQ:FGEN) has fallen short of that second goal, with a share price rise of 53% over five years, which is below the market return. The last year has been disappointing, with the stock price down 2.5% in that time.

View our latest analysis for FibroGen

FibroGen isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years FibroGen saw its revenue grow at 9.0% per year. That's a fairly respectable growth rate. The annual gain of 9% over five years is better than nothing, but falls short of the market. You could even argue that the share price was over optimistic, previously.

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

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on FibroGen

A Different Perspective

Investors in FibroGen had a tough year, with a total loss of 2.5%, against a market gain of about 15%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 9%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand FibroGen better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with FibroGen .

FibroGen 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.

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@simplywallst.com.