Eton Pharmaceuticals (NASDAQ:ETON) pulls back 13% this week, but still delivers shareholders massive 104% CAGR over 3 years

Eton Pharmaceuticals, Inc. (NASDAQ:ETON) shareholders might be concerned after seeing the share price drop 13% in the last week. But that doesn't displace its brilliant performance over three years. Indeed, the share price is up a whopping 745% in that time. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. The thing to consider is whether there is still too much elation around the company's prospects. It really delights us to see such great share price performance for investors.

While this past week has detracted from the company's three-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.

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Given that Eton Pharmaceuticals didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.

Eton Pharmaceuticals' revenue trended up 34% each year over three years. That's much better than most loss-making companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 104% per year, over the same period. Despite the strong run, top performers like Eton Pharmaceuticals have been known to go on winning for decades. So we'd recommend you take a closer look at this one, or even put it on your watchlist.

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

Take a more thorough look at Eton Pharmaceuticals' financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Eton Pharmaceuticals shareholders have received a total shareholder return of 121% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 17% per year), it would seem that the stock's performance has improved in recent times. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Eton Pharmaceuticals you should be aware of.

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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.