Investors bid Rhythm Pharmaceuticals (NASDAQ:RYTM) up US$87m despite increasing losses YoY, taking one-year return to 428%
While Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) shareholders are probably generally happy, the stock hasn't had particularly good run recently, with the share price falling 18% in the last quarter. But that doesn't change the fact that the returns over the last year have been spectacular. In fact, it is up 428% in that time. So we wouldn't blame sellers for taking some profits. The real question is whether the fundamental business performance can justify the strong increase over the long term.
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.
View our latest analysis for Rhythm Pharmaceuticals
Because Rhythm 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. 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.
Rhythm Pharmaceuticals grew its revenue by 628% last year. That's a head and shoulders above most loss-making companies. But the share price has really rocketed in response gaining 428% as previously mentioned. Despite the strong growth, it's certainly possible the market has gotten a little over-excited. So this looks like a great watchlist candidate for investors who look for high growth inflexion points.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
We're pleased to report that Rhythm Pharmaceuticals shareholders have received a total shareholder return of 428% over one year. Notably the five-year annualised TSR loss of 8% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Rhythm Pharmaceuticals better, we need to consider many other factors. For instance, we've identified 2 warning signs for Rhythm Pharmaceuticals that you should be aware of.
We will like Rhythm 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 American 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
