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If you love investing in stocks you're bound to buy some losers. But long term Kala Pharmaceuticals, Inc. (NASDAQ:KALA) shareholders have had a particularly rough ride in the last three year. Sadly for them, the share price is down 57% in that time. The more recent news is of little comfort, with the share price down 57% in a year. Furthermore, it's down 17% in about a quarter. That's not much fun for holders.
Kala Pharmaceuticals isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Over the last year, Kala Pharmaceuticals shareholders took a loss of 57%. In contrast the market gained about 39%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 16% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. 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. Take risks, for example - Kala Pharmaceuticals has 2 warning signs we think you should be aware of.
But note: Kala Pharmaceuticals may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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. 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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