Oramed Pharmaceuticals (NASDAQ:ORMP) investors are sitting on a loss of 63% if they invested a year ago
Investing in stocks comes with the risk that the share price will fall. And there's no doubt that Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) stock has had a really bad year. The share price is down a hefty 63% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 11% in three years. Furthermore, it's down 31% in about a quarter. That's not much fun for holders.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
Check out our latest analysis for Oramed Pharmaceuticals
Oramed 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Oramed Pharmaceuticals' revenue didn't grow at all in the last year. In fact, it fell 0.3%. That's not what investors generally want to see. In the absence of profits, it's not unreasonable that the share price fell 63%. Having said that, if growth is coming in the future, the stock may have better days ahead. We don't generally like to own companies with falling revenues and no profits, so we're pretty cautious of this one, at the moment.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Oramed Pharmaceuticals
A Different Perspective
Investors in Oramed Pharmaceuticals had a tough year, with a total loss of 63%, against a market gain of about 13%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 8% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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 5 warning signs for Oramed Pharmaceuticals (1 is potentially serious!) that you should be aware of before investing here.
Oramed Pharmaceuticals is not the only stock that insiders are buying. 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.
