What Type Of Returns Would GW Pharmaceuticals'(NASDAQ:GWPH) Shareholders Have Earned If They Purchased Their SharesYear Ago?
The easiest way to take advantage of a rising market is to buy an index fund. However, if you buy individual stocks, you can do either better or worse. Unfortunately, GW Pharmaceuticals plc (NASDAQ: GWPH) share price fell 17% in twelve months. This contrasts poorly with the market return of 23%. Even if shareholders bought some time ago, they wouldn't be particularly happy: the stock has fallen 15% in three years. It's down 26% in about a quarter.
Check out our latest analysis for GW Pharmaceuticals
With GW Pharmaceuticals posting a loss over the past twelve months, we believe the market is more focused on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong sales growth. This is because rapid sales growth can easily be extrapolated to profit projections, which are often of considerable size.
GW Pharmaceuticals increased sales by 264% last year. That is way above most other pre-profit companies. Given the growth in sales, the 17% decline seems quite hard. Our condolences go to the shareholders who are now underwater. On the plus side, if this company is moving profits in the right direction, such revenue growth could be an opportunity. Our monkey brains didn't evolve to think exponentially, so people tend to underestimate companies that are growing exponentially.
Below you can see how revenue and earnings have changed over time (find out the exact values by clicking on the picture).
Profit and sales growth
GW Pharmaceuticals is well known to investors, and many clever analysts have tried to predict future earnings levels. If you are thinking of buying or selling GW Pharmaceuticals stock, be sure to read this free report, which includes analyst consensus estimates for future earnings.
Investors in GW Pharmaceuticals had a rough year with an overall loss of 17% versus a market gain of around 23%. Even the stock prices of good stocks fall sometimes, but we want to see improvements in a company's fundamentals before we get too interested. Long-term investors wouldn't be so upset as they would have earned 0.9% every year over a five year period. If the fundamentals continue to point to long-term sustainable growth, the current sell-off could be an opportunity to consider. While it is worth considering the varying effects of market conditions on the stock price, other factors are even more important. For example, consider risks. Every company has them, and we've spotted 1 warning label for GW Pharmaceuticals that you should know about.
If you're looking to buy stocks in addition to management, you'll love this free list of companies. (Note: Insiders bought them).
Please note that the market returns reported in this article reflect the market weighted average returns on stocks currently traded on US exchanges.
This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell shares and does not take into account your goals or your financial situation. We want to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
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