If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term TherapeuticsMD, Inc. (NASDAQ:TXMD) shareholders know that all too well, since the share price is down considerably over three years. Sadly for them, the share price is down 63% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 46% lower in that time. On top of that, the share price has dropped a further 28% in a month. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
Given that TherapeuticsMD 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
Over three years, TherapeuticsMD grew revenue at 10.0% per year. That's a pretty good rate of top-line growth. So some shareholders would be frustrated with the compound loss of 28% per year. The market must have had really high expectations to be disappointed with this progress. So this is one stock that might be worth investigating further, or even adding to your watchlist.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
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. You can see what analysts are predicting for TherapeuticsMD in this interactive graph of future profit estimates.
A Different Perspective
TherapeuticsMD shareholders are down 46% for the year, but the market itself is up 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 7.1% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
There are plenty of other companies that have insiders buying up shares. You probably do 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.
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.
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