Revolution Medicines (NASDAQ:RVMD investor three-year losses grow to 18% as the stock sheds US$171m this past week
As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Revolution Medicines, Inc. (NASDAQ:RVMD) shareholders have had that experience, with the share price dropping 18% in three years, versus a market return of about 75%. Even worse, it's down 16% in about a month, which isn't fun at all. Importantly, this could be a market reaction to the recently released financial results. You can check out the latest numbers in our company report.
After losing 7.0% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
View our latest analysis for Revolution Medicines
Revolution Medicines wasn't profitable in the last twelve months, 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.
In the last three years Revolution Medicines saw its revenue shrink by 21% per year. That means its revenue trend is very weak compared to other loss making companies. With revenue in decline, the share price decline of 6% per year is hardly undeserved. The key question now is whether the company has the capacity to fund itself to profitability, without more cash. The company will need to return to revenue growth as quickly as possible, if it wants to see some enthusiasm from investors.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
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 Revolution Medicines
A Different Perspective
With a loss of 11% in the last year, Revolution Medicines' returns haven't been too far from the market return of -10%. Stock has cost shareholders 6% per year for three years. The fact that the most recent year is worse, suggests ongoing challenges. People who buy falling stocks like to quote Baron Rothschild who said to "buy when there's blood in the streets, even if the blood is your own." But Baron Rothschild also said to buy quality. It's always interesting to track share price performance over the longer term. But to understand Revolution Medicines better, we need to consider many other factors. For example, we've discovered 3 warning signs for Revolution Medicines (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
Revolution Medicines is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
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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