Shareholders have faith in loss-making Ascendis Pharma (NASDAQ:ASND) as stock climbs 3.1% in past week, taking five-year gain to 36%
If you buy and hold a stock for many years, you'd hope to be making a profit. Furthermore, you'd generally like to see the share price rise faster than the market. But Ascendis Pharma A/S (NASDAQ:ASND) has fallen short of that second goal, with a share price rise of 36% over five years, which is below the market return. Zooming in, the stock is up just 0.8% in the last year.
On the back of a solid 7-day performance, let's check what role the company's fundamentals have played in driving long term shareholder returns.
View our latest analysis for Ascendis Pharma
Given that Ascendis Pharma didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 5 years Ascendis Pharma saw its revenue grow at 45% per year. That's well above most pre-profit companies. It's nice to see shareholders have made a profit, but the gain of 6% over the period isn't that impressive compared to the overall market. You could argue the market is still pretty skeptical, given the growing revenues. It could be that the stock was previously over-priced - but if you're looking for underappreciated growth stocks, these numbers indicate that there might be an opportunity here.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Ascendis Pharma is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Ascendis Pharma in this interactive graph of future profit estimates.
A Different Perspective
Ascendis Pharma shareholders gained a total return of 0.8% during the year. But that return falls short of the market. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 6% over five years. Maybe the share price is just taking a breather while the business executes on its growth strategy. It's always interesting to track share price performance over the longer term. But to understand Ascendis Pharma better, we need to consider many other factors. Even so, be aware that Ascendis Pharma is showing 1 warning sign in our investment analysis , you should know about...
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 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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