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Recce Pharmaceuticals' (ASX:RCE) investors will be pleased with their fantastic 413% return over the last five years

·3 min read

Buying shares in the best businesses can build meaningful wealth for you and your family. While not every stock performs well, when investors win, they can win big. For example, the Recce Pharmaceuticals Ltd (ASX:RCE) share price is up a whopping 413% in the last half decade, a handsome return for long term holders. And this is just one example of the epic gains achieved by some long term investors. Also pleasing for shareholders was the 17% gain in the last three months. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for Recce Pharmaceuticals

Because Recce Pharmaceuticals made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.

In the last 5 years Recce Pharmaceuticals saw its revenue grow at 23% per year. That's well above most pre-profit companies. Arguably, this is well and truly reflected in the strong share price gain of 39%(per year) over the same period. Despite the strong run, top performers like Recce Pharmaceuticals have been known to go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

If you are thinking of buying or selling Recce Pharmaceuticals stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Although it hurts that Recce Pharmaceuticals returned a loss of 1.2% in the last twelve months, the broader market was actually worse, returning a loss of 1.9%. Longer term investors wouldn't be so upset, since they would have made 39%, each year, over five years. It could be that the business is just facing some short term problems, but shareholders should keep a close eye on the fundamentals. It's always interesting to track share price performance over the longer term. But to understand Recce Pharmaceuticals better, we need to consider many other factors. Take risks, for example - Recce Pharmaceuticals has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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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