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The Sage Therapeutics (NASDAQ:SAGE) Share Price Is Up -56% And Shareholders Are Holding On

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Simply Wall St
·3 min read
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Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Sage Therapeutics, Inc. (NASDAQ:SAGE) have suffered share price declines over the last year. The share price has slid 56% in that time. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 0.4% in three years. Furthermore, it's down 56% in about a quarter. That's not much fun for holders.

Check out our latest analysis for Sage Therapeutics

Sage Therapeutics isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Sage Therapeutics's revenue didn't grow at all in the last year. In fact, it fell 94%. That looks like a train-wreck result to investors far and wide. Arguably, the market has responded appropriately to this performance by sending the share price down 56% in the same time period. Buying shares in companies that lose money, shrink revenue, and see share price declines is unpopular with investors, but popular with speculators (apparently). So we'll be looking for strong improvements on the numbers before getting excited.

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

NasdaqGM:SAGE Income Statement, February 25th 2020
NasdaqGM:SAGE Income Statement, February 25th 2020

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Investors in Sage Therapeutics had a tough year, with a total loss of 56%, against a market gain of about 16%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 8.9% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for Sage Therapeutics you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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 editorial-team@simplywallst.com. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.