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Investors bid Apellis Pharmaceuticals (NASDAQ:APLS) up US$777m despite increasing losses YoY, taking three-year CAGR to 51%

·2 min read

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. To wit, the Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) share price has flown 244% in the last three years. That sort of return is as solid as granite. On top of that, the share price is up 24% in about a quarter.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for Apellis Pharmaceuticals

Given that Apellis Pharmaceuticals 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 3 years Apellis Pharmaceuticals saw its revenue grow at 129% per year. That's much better than most loss-making companies. Meanwhile, the share price performance has been pretty solid at 51% compound over three years. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say Apellis Pharmaceuticals is still worth investigating - successful businesses can often keep growing for long periods.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
earnings-and-revenue-growth

Apellis Pharmaceuticals is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Apellis Pharmaceuticals in this interactive graph of future profit estimates.

A Different Perspective

Apellis Pharmaceuticals shareholders are up 1.5% for the year. While you don't go broke making a profit, this return was actually lower than the average market return of about 7.0%. But the (superior) three-year TSR of 51% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Apellis Pharmaceuticals (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

We will like Apellis Pharmaceuticals 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.