While shareholders of Enanta Pharmaceuticals (NASDAQ:ENTA) are in the black over 5 years, those who bought a week ago aren't so fortunate

By
Simply Wall St
Published
January 17, 2022
NasdaqGS:ENTA
Source: Shutterstock

Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) shareholders have seen the share price descend 20% over the month. But at least the stock is up over the last five years. However we are not very impressed because the share price is only up 86%, less than the market return of 121%.

In light of the stock dropping 13% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive five-year return.

See our latest analysis for Enanta Pharmaceuticals

Enanta Pharmaceuticals 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. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Enanta Pharmaceuticals can boast revenue growth at a rate of 5.4% per year. Put simply, that growth rate fails to impress. Like its revenue, its share price gained over the period. The increase of 13% per year probably reflects the modest revenue growth. It seems likely that we'll have to zoom in on the data, including profits, to understand if there is an opportunity here.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NasdaqGS:ENTA Earnings and Revenue Growth January 17th 2022

Enanta Pharmaceuticals is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Enanta Pharmaceuticals stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

We're pleased to report that Enanta Pharmaceuticals shareholders have received a total shareholder return of 28% over one year. That's better than the annualised return of 13% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Enanta Pharmaceuticals you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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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