Shareholders have faith in loss-making Rhythm Pharmaceuticals (NASDAQ:RYTM) as stock climbs 7.8% in past week, taking one-year gain to 190%
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM). Its share price is already up an impressive 190% in the last twelve months. Also pleasing for shareholders was the 27% gain in the last three months. Having said that, the longer term returns aren't so impressive, with stock gaining just 28% in three years.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
Check out our latest analysis for Rhythm Pharmaceuticals
Given that Rhythm Pharmaceuticals 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. 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.
Rhythm Pharmaceuticals grew its revenue by 1,146% last year. That's well above most other pre-profit companies. And the share price has responded, gaining 190% as we previously mentioned. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at Rhythm Pharmaceuticals' financial health with this free report on its balance sheet.
A Different Perspective
We're pleased to report that Rhythm Pharmaceuticals shareholders have received a total shareholder return of 190% over one year. Notably the five-year annualised TSR loss of 0.2% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Rhythm Pharmaceuticals better, we need to consider many other factors. For example, we've discovered 3 warning signs for Rhythm Pharmaceuticals that you should be aware of before investing here.
Of course Rhythm Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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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