If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Kala Pharmaceuticals, Inc. (NASDAQ:KALA) shareholders know that all too well, since the share price is down considerably over three years. Unfortunately, they have held through a 51% decline in the share price in that time. Contrary to the longer term story, the last month has been good for stockholders, with a share price gain of 8.7%. But this could be related to good market conditions, with stocks up around 4.0% during the period.
Kala 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. 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.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Kala Pharmaceuticals' financial health with this free report on its balance sheet.
A Different Perspective
Over the last year, Kala Pharmaceuticals shareholders took a loss of 20%. In contrast the market gained about 59%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Unfortunately, the longer term story isn't pretty, with investment losses running at 15% per year over three years. We would want clear information suggesting the company will grow, before taking the view that the share price will stabilize. It's always interesting to track share price performance over the longer term. But to understand Kala Pharmaceuticals better, we need to consider many other factors. For example, we've discovered 1 warning sign for Kala Pharmaceuticals that you should be aware of before investing here.
Of course Kala Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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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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. 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.
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