Investors push PYC Therapeutics (ASX:PYC) 12% lower this week, company's increasing losses might be to blame

The PYC Therapeutics Limited (ASX:PYC) share price has had a bad week, falling 12%. But that doesn't change the fact that the returns over the last five years have been very strong. In fact, the share price is 246% higher today. Generally speaking the long term returns will give you a better idea of business quality than short periods can. Of course, that doesn't necessarily mean it's cheap now. Unfortunately not all shareholders will have held it for five years, so spare a thought for those caught in the 33% decline over the last three years: that's a long time to wait for profits.

Since the long term performance has been good but there's been a recent pullback of 12%, let's check if the fundamentals match the share price.

Check out our latest analysis for PYC Therapeutics

PYC Therapeutics 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

For the last half decade, PYC Therapeutics can boast revenue growth at a rate of 67% per year. That's well above most pre-profit companies. Meanwhile, its share price performance certainly reflects the strong growth, given the share price grew at 28% per year, compound, during the period. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes PYC Therapeutics worth investigating - it may have its best days ahead.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. So it makes a lot of sense to check out what analysts think PYC Therapeutics will earn in the future (free profit forecasts).

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between PYC Therapeutics' total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. We note that PYC Therapeutics' TSR, at 250% is higher than its share price return of 246%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.

A Different Perspective

It's good to see that PYC Therapeutics has rewarded shareholders with a total shareholder return of 49% in the last twelve months. That's better than the annualised return of 28% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand PYC Therapeutics better, we need to consider many other factors. For example, we've discovered 4 warning signs for PYC Therapeutics (2 are a bit unpleasant!) that you should be aware of before investing here.

PYC Therapeutics is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

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

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.