While not a mind-blowing move, it is good to see that the Arcus Biosciences, Inc. (NYSE:RCUS) share price has gained 12% in the last three months. But that doesn't change the reality of under-performance over the last twelve months. After all, the share price is down 10% in the last year, significantly under-performing the market.
Because Arcus Biosciences 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Arcus Biosciences's revenue didn't grow at all in the last year. In fact, it fell 15%. That's not what investors generally want to see. Shareholders have seen the share price drop 10% in that time. That seems pretty reasonable given the lack of both profits and revenue growth. It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think Arcus Biosciences will earn in the future (free profit forecasts).
A Different Perspective
While Arcus Biosciences shareholders are down 10% for the year, the market itself is up 23%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 12% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. 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. For instance, we've identified 3 warning signs for Arcus Biosciences (2 make us uncomfortable) that you should be aware of.
Arcus Biosciences is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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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