Investors in Denali Therapeutics (NASDAQ:DNLI) from three years ago are still down 74%, even after 15% gain this past week

This week we saw the Denali Therapeutics Inc. (NASDAQ:DNLI) share price climb by 15%. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 74% in that time. So it sure is nice to see a bit of an improvement. Only time will tell if the company can sustain the turnaround.

The recent uptick of 15% could be a positive sign of things to come, so let's take a look at historical fundamentals.

View our latest analysis for Denali Therapeutics

Denali Therapeutics 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 expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years Denali Therapeutics saw its revenue shrink by 2.0% per year. That's not what investors generally want to see. Having said that the 20% annualized share price decline highlights the risk of investing in unprofitable companies. We're generally averse to companies with declining revenues, but we're not alone in that. Don't let a share price decline ruin your calm. You make better decisions when you're calm.

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

Denali Therapeutics is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Denali Therapeutics shareholders are down 26% for the year, but the market itself is up 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Denali Therapeutics better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Denali Therapeutics you should be aware of, and 1 of them can't be ignored.

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 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.