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Would Shareholders Who Purchased DURECT's (NASDAQ:DRRX) Stock Year Be Happy With The Share price Today?

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·2 min read
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The simplest way to benefit from a rising market is to buy an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. Investors in DURECT Corporation (NASDAQ:DRRX) have tasted that bitter downside in the last year, as the share price dropped 41%. That falls noticeably short of the market return of around 36%. At least the damage isn't so bad if you look at the last three years, since the stock is down 2.1% in that time. Shareholders have had an even rougher run lately, with the share price down 18% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.

See our latest analysis for DURECT

Given that DURECT 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

DURECT's revenue didn't grow at all in the last year. In fact, it fell 80%. That looks like a train-wreck result to investors far and wide. Meanwhile, the share price dropped by 41%. It's always work digging deeper, but we'd probably need to see a strong balance sheet and bottom line improvements to get interested in this one.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

Take a more thorough look at DURECT's financial health with this free report on its balance sheet.

A Different Perspective

DURECT shareholders are down 41% for the year, but the market itself is up 36%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 4% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand DURECT better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with DURECT .

Of course DURECT 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.