Compugen (NASDAQ:CGEN) shareholder returns have been stellar, earning 204% in 1 year

When you buy shares in a company, there is always a risk that the price drops to zero. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Compugen Ltd. (NASDAQ:CGEN) share price had more than doubled in just one year - up 204%. It's even up 13% in the last week. Unfortunately the longer term returns are not so good, with the stock falling 75% in the last three years.

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

View our latest analysis for Compugen

Compugen wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Compugen grew its revenue by 470% last year. That's stonking growth even when compared to other loss-making stocks. Meanwhile, the market has paid attention, sending the share price soaring 204% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

It's nice to see that Compugen shareholders have received a total shareholder return of 204% over the last year. Notably the five-year annualised TSR loss of 11% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. It's always interesting to track share price performance over the longer term. But to understand Compugen better, we need to consider many other factors. Take risks, for example - Compugen has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

We will like Compugen 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 American 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.