While it may not be enough for some shareholders, we think it is good to see the BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) share price up 27% in a single quarter. But if you look at the last five years the returns have not been good. You would have done a lot better buying an index fund, since the stock has dropped 10% in that half decade.
Because BioMarin Pharmaceutical 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.
In the last half decade, BioMarin Pharmaceutical saw its revenue increase by 16% per year. That's better than most loss-making companies. The share price drop of 2.2% per year over five years would be considered let down. So you might argue the BioMarin Pharmaceutical should get more credit for its rather impressive revenue growth over the period. So now is probably an apt time to look closer at the stock, if you think it has potential.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
BioMarin Pharmaceutical is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
BioMarin Pharmaceutical shareholders are down 3.6% for the year, but the market itself is up 30%. 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 2.2% 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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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