If you buy and hold a stock for many years, you'd hope to be making a profit. But more than that, you probably want to see it rise more than the market average. But Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) has fallen short of that second goal, with a share price rise of 49% over five years, which is below the market return. Zooming in, the stock is up just 3.7% in the last year.
While Amphastar Pharmaceuticals made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.
For the last half decade, Amphastar Pharmaceuticals can boast revenue growth at a rate of 7.5% per year. That's a fairly respectable growth rate. The annual gain of 8% over five years is better than nothing, but falls short of the market. Arguably, that means, the market (previously) expected stronger growth from the company.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Amphastar Pharmaceuticals' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Amphastar Pharmaceuticals shareholders are up 3.7% for the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 8% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Amphastar Pharmaceuticals better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Amphastar Pharmaceuticals you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
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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This article by Simply Wall St is general in nature. 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.
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