While Silk Road Medical (NASDAQ:SILK) shareholders have made 17% in 3 years, increasing losses might now be front of mind as stock sheds 8.4% this week
Silk Road Medical, Inc (NASDAQ:SILK) shareholders might be concerned after seeing the share price drop 28% in the last month. But at least the stock is up over the last three years. However, it's unlikely many shareholders are elated with the share price gain of 17% over that time, given the rising market.
In light of the stock dropping 8.4% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive three-year return.
See our latest analysis for Silk Road Medical
Silk Road Medical 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last three years Silk Road Medical has grown its revenue at 26% annually. That's well above most pre-profit companies. While long-term shareholders have made money, the 5% per year gain over three years isn't that great given the rising market. Generally, we'd expect a stronger share price, given the impressive revenue growth. If the business can trend towards profitability and fund its growth, then the market could present an opportunity. But you might want to take a closer look at this one.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
While it's never nice to take a loss, Silk Road Medical shareholders can take comfort that their trailing twelve month loss of 3.4% wasn't as bad as the market loss of around -13%. Shareholders who have held for three years might be relatively sanguine about the recent weakness, given they have made 5% per year for three years. Given the three year returns are better than the return over the last year, it might be that the broader market has weighed on the stock recently. 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. Take risks, for example - Silk Road Medical has 3 warning signs we think 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 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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