Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. One such superstar is MyoKardia, Inc. (NASDAQ:MYOK), which saw its share price soar 377% in three years. Also pleasing for shareholders was the 27% gain in the last three months.
MyoKardia isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. 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.
In the last 3 years MyoKardia saw its revenue shrink by 16% per year. This is in stark contrast to the strong share price growth of 68%, compound, per year. This clear lack of correlation between revenue and share price is surprising to see in a money losing company. At the risk of upsetting holders, this does suggest that hope for a better future is playing a significant role in the share price action.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling MyoKardia stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Over the last year MyoKardia shareholders have received a TSR of 18%. Unfortunately this falls short of the market return of around 21%. At least the longer term returns (running at about 68% a year, are better. Even the best companies don't see strong share price performance every year. Before spending more time on MyoKardia it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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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