Destiny Pharma (LON:DEST) delivers shareholders solid 131% return over 1 year, surging 17% in the last week alone

Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Destiny Pharma plc (LON:DEST) share price has soared 131% in the last 1 year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 69% over the last quarter. However, the stock hasn't done so well in the longer term, with the stock only up 28% in three years.

The past week has proven to be lucrative for Destiny Pharma investors, so let's see if fundamentals drove the company's one-year performance.

Check out our latest analysis for Destiny Pharma

With just UK£986,051 worth of revenue in twelve months, we don't think the market considers Destiny Pharma to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Destiny Pharma has the funding to invent a new product before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Destiny Pharma investors might know.

Destiny Pharma had cash in excess of all liabilities of UK£8.7m when it last reported (June 2023). That's not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price up 89% in the last year , the market is seems hopeful about the potential, despite the cash burn. You can see in the image below, how Destiny Pharma's cash levels have changed over time (click to see the values).

Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.

A Different Perspective

It's good to see that Destiny Pharma has rewarded shareholders with a total shareholder return of 131% in the last twelve months. That gain is better than the annual TSR over five years, which is 3%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For example, we've discovered 6 warning signs for Destiny Pharma (1 can't be ignored!) that you should be aware of before investing here.

Of course Destiny Pharma may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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