The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. For example, the AnaptysBio, Inc. (NASDAQ:ANAB) share price is down 42% in the last year. That’s well bellow the market return of 1.4%. Because AnaptysBio hasn’t been listed for many years, the market is still learning about how the business performs. There was little comfort for shareholders in the last week as the price declined a further 3.9%.
Given that AnaptysBio didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good 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 just one year AnaptysBio saw its revenue fall by 50%. That’s not what investors generally want to see. The stock price has languished lately, falling 42% in a year. That seems pretty reasonable given the lack of both profits and revenue growth. We think most holders must believe revenue growth will improve, or else costs will decline.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
AnaptysBio is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for AnaptysBio in this interactive graph of future profit estimates.
A Different Perspective
While AnaptysBio shareholders are down 42% for the year, the market itself is up 1.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 7.6%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.