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Investors in Xenon Pharmaceuticals (NASDAQ:XENE) have made a fantastic return of 965% over the past five years

We think all investors should try to buy and hold high quality multi-year winners. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held Xenon Pharmaceuticals Inc. (NASDAQ:XENE) shares for the last five years, while they gained 965%. And this is just one example of the epic gains achieved by some long term investors. On the other hand, we note it's down 9.0% in about a month. We love happy stories like this one. The company should be really proud of that performance!

So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

Check out our latest analysis for Xenon Pharmaceuticals

Given that Xenon 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

For the last half decade, Xenon Pharmaceuticals can boast revenue growth at a rate of 47% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 60% per year in that time. It's never too late to start following a top notch stock like Xenon Pharmaceuticals, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

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

Xenon Pharmaceuticals is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Xenon Pharmaceuticals will earn in the future (free analyst consensus estimates)

A Different Perspective

We're pleased to report that Xenon Pharmaceuticals shareholders have received a total shareholder return of 37% over one year. Having said that, the five-year TSR of 60% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Xenon Pharmaceuticals you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.

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