Investors in Galapagos (AMS:GLPG) from five years ago are still down 86%, even after 5.9% gain this past week

Long term investing is the way to go, but that doesn't mean you should hold every stock forever. We don't wish catastrophic capital loss on anyone. For example, we sympathize with anyone who was caught holding Galapagos NV (AMS:GLPG) during the five years that saw its share price drop a whopping 86%. And it's not just long term holders hurting, because the stock is down 28% in the last year. But it's up 5.9% in the last week. While a drop like that is definitely a body blow, money isn't as important as health and happiness.

The recent uptick of 5.9% could be a positive sign of things to come, so let's take a look at historical fundamentals.

Check out our latest analysis for Galapagos

Because Galapagos made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire 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.

Over half a decade Galapagos reduced its trailing twelve month revenue by 28% for each year. That puts it in an unattractive cohort, to put it mildly. So it's not altogether surprising to see the share price down 13% per year in the same time period. This kind of price performance makes us very wary, especially when combined with falling revenue. Ironically, that behavior could create an opportunity for the contrarian investor - but only if there are good reasons to predict a brighter future.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Galapagos is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Galapagos in this interactive graph of future profit estimates.

A Different Perspective

Galapagos shareholders are down 28% for the year, but the market itself is up 9.2%. 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. However, the loss over the last year isn't as bad as the 13% per annum loss investors have suffered over the last half decade. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Galapagos better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Galapagos (including 1 which shouldn't be ignored) .

We will like Galapagos better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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