Curis, Inc. (NASDAQ:CRIS) shareholders should be happy to see the share price up 30% in the last month. But the last three years have seen a terrible decline. To wit, the share price sky-dived 74% in that time. So it sure is nice to see a big of an improvement. But the more important question is whether the underlying business can justify a higher price still.
Curis isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last three years, Curis saw its revenue grow by 13% per year, compound. That’s a pretty good rate of top-line growth. So it’s hard to believe the share price decline of 36% per year is due to the revenue. More likely, the market was spooked by the cost of that revenue. If you buy into companies that lose money then you always risk losing money yourself. Just don’t lose the lesson.
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 Curis shareholders have received a total shareholder return of 36% over the last year. There’s no doubt those recent returns are much better than the TSR loss of 23% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. You could get a better understanding of Curis’s growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will 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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