If You Had Bought Medicines (NASDAQ:MDCO) Stock A Year Ago, You’d Be Sitting On A 28% Loss, Today
While it may not be enough for some shareholders, we think it is good to see the The Medicines Company (NASDAQ:MDCO) share price up 14% in a single quarter. But in truth the last year hasn’t been good for the share price. In fact the stock is down 28% in the last year, well below the market return.
See our latest analysis for Medicines
Because Medicines is loss-making, 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In just one year Medicines saw its revenue fall by 86%. If you think that’s a particularly bad result, you’re statistically on the money Meanwhile, the share price dropped by 28%. We would want to see improvements in the core business, and diminishing losses, before getting too excited about this one.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
It’s good to see that there was some significant insider buying in the last three months. That’s a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling Medicines stock, you should check out this free report showing analyst profit forecasts.
A Different Perspective
Investors in Medicines had a tough year, with a total loss of 28%, against a market gain of about 0.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3.8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Medicines 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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
