Swelling losses haven't held back gains for Merus (NASDAQ:MRUS) shareholders since they're up 201% over 5 years

It hasn't been the best quarter for Merus N.V. (NASDAQ:MRUS) shareholders, since the share price has fallen 11% in that time. But in stark contrast, the returns over the last half decade have impressed. Indeed, the share price is up an impressive 201% in that time. To some, the recent pullback wouldn't be surprising after such a fast rise. Ultimately business performance will determine whether the stock price continues the positive long term trend.

Although Merus has shed US$170m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Merus

Given that Merus 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. Shareholders of unprofitable companies usually desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Merus can boast revenue growth at a rate of 5.8% per year. That's not a very high growth rate considering the bottom line. So we wouldn't have expected to see the share price to have lifted 25% for each year during that time, but that's what happened. While we wouldn't be overly concerned, it might be worth checking whether you think the fundamental business gains really justify the share price action. It may be that the market is pretty optimistic about Merus.

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

Merus 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 Merus stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

It's nice to see that Merus shareholders have received a total shareholder return of 48% over the last year. That gain is better than the annual TSR over five years, which is 25%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Take risks, for example - Merus has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.