Investors bid Cytokinetics (NASDAQ:CYTK) up US$519m despite increasing losses YoY, taking three-year CAGR to 79%
Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. For example, the Cytokinetics, Incorporated (NASDAQ:CYTK) share price is up a whopping 478% in the last three years, a handsome return for long term holders. On top of that, the share price is up 29% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
Check out our latest analysis for Cytokinetics
Cytokinetics wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last three years Cytokinetics has grown its revenue at 20% annually. That's a very respectable growth rate. Some shareholders might think that the share price rise of 79% per year is a lucky result, considering the level of revenue growth. A hot stock like this is usually well worth taking a closer look at, as long as you don't let the fear of missing out (FOMO) impact your thinking.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at Cytokinetics' financial health with this free report on its balance sheet.
A Different Perspective
It's good to see that Cytokinetics has rewarded shareholders with a total shareholder return of 143% in the last twelve months. That gain is better than the annual TSR over five years, which is 30%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Cytokinetics better, we need to consider many other factors. Even so, be aware that Cytokinetics is showing 3 warning signs in our investment analysis , you should know about...
We will like Cytokinetics 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.
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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