Further weakness as Strides Pharma Science (NSE:STAR) drops 10% this week, taking five-year losses to 70%

By
Simply Wall St
Published
May 10, 2022
NSEI:STAR
Source: Shutterstock

We're definitely into long term investing, but some companies are simply bad investments over any time frame. It hits us in the gut when we see fellow investors suffer a loss. Spare a thought for those who held Strides Pharma Science Limited (NSE:STAR) for five whole years - as the share price tanked 72%. And some of the more recent buyers are probably worried, too, with the stock falling 65% in the last year. Shareholders have had an even rougher run lately, with the share price down 26% in the last 90 days.

After losing 10% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Check out our latest analysis for Strides Pharma Science

Strides Pharma Science isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. 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.

In the last five years Strides Pharma Science saw its revenue shrink by 1.3% per year. While far from catastrophic that is not good. If a business loses money, you want it to grow, so no surprises that the share price has dropped 11% each year in that time. It takes a certain kind of mental fortitude (or recklessness) to buy shares in a company that loses money and doesn't grow revenue. That is not really what the successful investors we know aim for.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

earnings-and-revenue-growth
NSEI:STAR Earnings and Revenue Growth May 10th 2022

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. So it makes a lot of sense to check out what analysts think Strides Pharma Science will earn in the future (free profit forecasts).

A Different Perspective

Investors in Strides Pharma Science had a tough year, with a total loss of 65% (including dividends), against a market gain of about 17%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Strides Pharma Science better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Strides Pharma Science (including 2 which are concerning) .

Strides Pharma Science 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 IN exchanges.

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