Loss-making Arvinas (NASDAQ:ARVN) has seen earnings and shareholder returns follow the same downward trajectory over past -24%
Over the last month the Arvinas, Inc. (NASDAQ:ARVN) has been much stronger than before, rebounding by 30%. But that is minimal compensation for the share price under-performance over the last year. The cold reality is that the stock has dropped 24% in one year, under-performing the market.
While the stock has risen 19% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.
See our latest analysis for Arvinas
Arvinas isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. 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.
Arvinas grew its revenue by 84% over the last year. That's well above most other pre-profit companies. Given the revenue growth, the share price drop of 24% seems quite harsh. Our sympathies to shareholders who are now underwater. Prima facie, revenue growth like that should be a good thing, so it's worth checking whether losses have stabilized. Our brains have evolved to think in linear fashion, so there's value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Arvinas is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Arvinas stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
The last twelve months weren't great for Arvinas shares, which cost holders 24%, while the market was up about 20%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Shareholders have lost 0.7% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 1 warning sign for Arvinas that you should be aware of before investing here.
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 American exchanges.
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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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