Even after rising 172% this past week, Kala Pharmaceuticals (NASDAQ:KALA) shareholders are still down 81% over the past three years
Kala Pharmaceuticals, Inc. (NASDAQ:KALA) shareholders are doubtless heartened to see the share price bounce 172% in just one week. But that is meagre solace in the face of the shocking decline over three years. To wit, the share price sky-dived 81% in that time. So it sure is nice to see a bit of an improvement. The thing to think about is whether the business has really turned around. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
The recent uptick of 172% could be a positive sign of things to come, so let's take a lot at historical fundamentals.
Check out our latest analysis for Kala Pharmaceuticals
Because Kala Pharmaceuticals 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.
Over three years, Kala Pharmaceuticals grew revenue at 67% per year. That is faster than most pre-profit companies. So why has the share priced crashed 22% per year, in the same time? You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. Unless the balance sheet is strong, the company might have to raise capital.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Kala Pharmaceuticals' financial health with this free report on its balance sheet.
A Different Perspective
The last twelve months weren't great for Kala Pharmaceuticals shares, which performed worse than the market, costing holders 78%. The market shed around 1.9%, no doubt weighing on the stock price. Shareholders have lost 22% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand Kala Pharmaceuticals better, we need to consider many other factors. For instance, we've identified 3 warning signs for Kala Pharmaceuticals that you should be aware of.
We will like Kala Pharmaceuticals better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
