Theratechnologies (TSE:TH investor five-year losses grow to 88% as the stock sheds CA$16m this past week
Some stocks are best avoided. We don't wish catastrophic capital loss on anyone. Anyone who held Theratechnologies Inc. (TSE:TH) for five years would be nursing their metaphorical wounds since the share price dropped 88% in that time. And we doubt long term believers are the only worried holders, since the stock price has declined 61% over the last twelve months. Shareholders have had an even rougher run lately, with the share price down 13% 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. We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don't have to lose the lesson.
After losing 13% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
See our latest analysis for Theratechnologies
Theratechnologies 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over five years, Theratechnologies grew its revenue at 12% per year. That's a pretty good rate for a long time period. So the stock price fall of 14% per year seems pretty steep. The truth is that the growth might be below expectations, and investors are probably worried about the continual losses.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
If you are thinking of buying or selling Theratechnologies stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Investors in Theratechnologies had a tough year, with a total loss of 61%, against a market gain of about 8.4%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 14% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Theratechnologies you should be aware of, and 2 of them are significant.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Canadian 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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