Investors in ACADIA Pharmaceuticals (NASDAQ:ACAD) from three years ago are still down 62%, even after 4.1% gain this past week
Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) shareholders. Regrettably, they have had to cope with a 62% drop in the share price over that period. And the ride hasn't got any smoother in recent times over the last year, with the price 33% lower in that time. Furthermore, it's down 12% in about a quarter. That's not much fun for holders.
Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline.
See our latest analysis for ACADIA Pharmaceuticals
Because ACADIA Pharmaceuticals 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. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last three years, ACADIA Pharmaceuticals saw its revenue grow by 15% per year, compound. That's a fairly respectable growth rate. So some shareholders would be frustrated with the compound loss of 18% per year. The market must have had really high expectations to be disappointed with this progress. It would be well worth taking a closer look at the company, to determine growth trends (and balance sheet strength).
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
ACADIA Pharmaceuticals is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think ACADIA Pharmaceuticals will earn in the future (free analyst consensus estimates)
A Different Perspective
We regret to report that ACADIA Pharmaceuticals shareholders are down 33% for the year. Unfortunately, that's worse than the broader market decline of 22%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. You could get a better understanding of ACADIA Pharmaceuticals' growth by checking out this more detailed historical graph of 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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