Spero Therapeutics, Inc. (NASDAQ:SPRO) shareholders might be concerned after seeing the share price drop 19% in the last month. Taking a longer term view we see the stock is up over one year. In that time, it is up 11%, which isn't bad, but is below the market return of 27%.
Because Spero Therapeutics 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year Spero Therapeutics saw its revenue grow by 396%. That's stonking growth even when compared to other loss-making stocks. To be blunt the 11% is underwhelming given the strong revenue growth. When revenue spikes but the share price doesn't we can't help wondering if the market is missing something. It could be that the stock was previously over-hyped, or that losses are causing concern for the market, but this could be an opportunity.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
We're happy to report that Spero Therapeutics are up 11% over the year. Unfortunately this falls short of the market return of around 27%. The last three months haven't been great for shareholder returns, since the share price has trailed the market by 26% in the last three months. It might be that investors are more concerned about the business lately due to some fundamental change (or else the share price simply got ahead of itself, previously). It's always interesting to track share price performance over the longer term. But to understand Spero Therapeutics better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Spero Therapeutics you should know about.
We will like Spero Therapeutics 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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