Does Revolution Medicines' (NASDAQ:RVMD) Share Price Gain of 80% Match Its Business Performance?
Revolution Medicines, Inc. (NASDAQ:RVMD) shareholders might be concerned after seeing the share price drop 10% in the last month. But looking back over the last year, the returns have actually been rather pleasing! After all, the share price is up a market-beating 80% in that time.
Check out our latest analysis for Revolution Medicines
Revolution Medicines 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. 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.
In the last year Revolution Medicines saw its revenue shrink by 14%. The stock is up 80% in that time, a fine performance given the revenue drop. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Revolution Medicines will earn in the future (free profit forecasts).
A Different Perspective
It's nice to see that Revolution Medicines shareholders have gained 80% over the last year. That's better than the more recent three month gain of 11%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It's always interesting to track share price performance over the longer term. But to understand Revolution Medicines better, we need to consider many other factors. For instance, we've identified 4 warning signs for Revolution Medicines (1 doesn't sit too well with us) that you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
