The Avid Bioservices, Inc. (NASDAQ:CDMO) share price has had a bad week, falling 14%. In contrast, the return over three years has been impressive. Indeed, the share price is up a very strong 232% in that time. To some, the recent share price pullback wouldn’t be surprising after such a good run. Only time will tell if there is still too much optimism currently reflected in the share price.
Avid Bioservices 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 3 years Avid Bioservices saw its revenue shrink by 6.4% per year. So we wouldn’t have expected the share price to gain 49% per year, but it has. It’s fair to say shareholders are definitely counting on a bright future.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free report showing analyst forecasts should help you form a view on Avid Bioservices
A Different Perspective
We’re pleased to report that Avid Bioservices shareholders have received a total shareholder return of 55% over one year. There’s no doubt those recent returns are much better than the TSR loss of 7.5% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
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 US exchanges.
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