Fortress Biotech, Inc. (NASDAQ:FBIO) shareholders will doubtless be very grateful to see the share price up 42% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 24% in the last three years, significantly under-performing the market.
Because Fortress Biotech is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last three years, Fortress Biotech's revenue dropped 26% per year. That means its revenue trend is very weak compared to other loss making companies. With revenue in decline, the share price decline of 8.9% per year is hardly undeserved. The key question now is whether the company has the capacity to fund itself to profitability, without more cash. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It's good to see that Fortress Biotech has rewarded shareholders with a total shareholder return of 19% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 0.4% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Fortress Biotech it might be wise to click here to see if insiders have been buying or selling shares.
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.
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