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By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, the Collegium Pharmaceutical, Inc. (NASDAQ:COLL) share price is up 51% in the last three years, clearly besting the market return of around 32% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 6.8%.
Given that Collegium Pharmaceutical only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 3 years Collegium Pharmaceutical saw its revenue grow at 58% per year. That's much better than most loss-making companies. The share price rise of 15% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. If that's the case, now might be the time to take a close look at Collegium Pharmaceutical. If the company is trending towards profitability then it could be very interesting.
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 know that Collegium Pharmaceutical has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Collegium Pharmaceutical provided a TSR of 6.8% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 0.5% per year, over five years. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Collegium Pharmaceutical better, we need to consider many other factors. For instance, we've identified 2 warning signs for Collegium Pharmaceutical (1 is a bit unpleasant) that you should be aware of.
Of course Collegium Pharmaceutical 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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