Does Sol-Gel Technologies' (NASDAQ:SLGL) Share Price Gain of 23% Match Its Business Performance?
The Sol-Gel Technologies Ltd. (NASDAQ:SLGL) share price is down a rather concerning 30% in the last month. Taking a longer term view we see the stock is up over one year. But to be blunt its return of 23% fall short of what you could have got from an index fund (around 48%).
Check out our latest analysis for Sol-Gel Technologies
Sol-Gel Technologies 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year Sol-Gel Technologies saw its revenue shrink by 70%. Given the revenue reduction the modest 23% share price rise over the year seems pretty decent. We'd want to see progress to profitability before getting too interested in this stock.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
Sol-Gel Technologies produced a TSR of 23% over the last year. While you don't go broke making a profit, this return was actually lower than the average market return of about 48%. On the other hand, the TSR over three years was worse, at just 1.9% per year. This suggests the company's position is improving. If the business can justify the share price gain with improving fundamental data, then there could be more gains to come. 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. Take risks, for example - Sol-Gel Technologies has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Of course Sol-Gel Technologies may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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