The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of GW Pharmaceuticals plc (NASDAQ:GWPH) stock is up an impressive 180% over the last five years. Also pleasing for shareholders was the 68% gain in the last three months.
GW Pharmaceuticals 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last 5 years GW Pharmaceuticals saw its revenue shrink by 34% per year. On the other hand, the share price done the opposite, gaining 23%, compound, each year. It just goes to show tht the market is forward looking, and it’s not always easy to predict the future based on past trends. Still, this situation makes us a little wary of the stock.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
GW Pharmaceuticals is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
It’s good to see that GW Pharmaceuticals has rewarded shareholders with a total shareholder return of 50% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 23% 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. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
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 US exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.