Is Cerecor’s (NASDAQ:CERC) Share Price Gain Of 107% Well Earned?

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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. For example, the Cerecor Inc. (NASDAQ:CERC) share price has soared 107% in the last three years. How nice for those who held the stock!

Check out our latest analysis for Cerecor

Because Cerecor is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Cerecor’s revenue trended up 68% each year over three years. That’s well above most pre-profit companies. Along the way, the share price gained 27% per year, a solid pop by our standards. This suggests the market has recognized the progress the business has made, at least to a significant degree. Nonetheless, we’d say Cerecor is still worth investigating – successful businesses can often keep growing for long periods.

The graphic below shows how revenue and earnings have changed as management guided the business forward. If you want to see cashflow, you can click on the chart.

NasdaqCM:CERC Income Statement, June 7th 2019
NasdaqCM:CERC Income Statement, June 7th 2019

Take a more thorough look at Cerecor’s financial health with this free report on its balance sheet.

A Different Perspective

It’s nice to see that Cerecor shareholders have gained 16% (in total) over the last year. The TSR has been even better over three years, coming in at 27% per year. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.