Investors bid Nutriband (NASDAQ:NTRB) up US$16m despite increasing losses YoY, taking three-year CAGR to 18%

Buying a low-cost index fund will get you the average market return. But in any diversified portfolio of stocks, you'll see some that fall short of the average. Unfortunately for shareholders, while the Nutriband Inc. (NASDAQ:NTRB) share price is up 63% in the last three years, that falls short of the market return. Having said that, the 58% increase over the past year is good to see.

Since the stock has added US$16m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

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Nutriband isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last 3 years Nutriband saw its revenue grow at 6.3% per year. That's not a very high growth rate considering it doesn't make profits. It's probably fair to say that the modest growth is reflected in the modest share price gain of 18% per year. A closer look at the revenue and profit trends could uncover help us understand if the company will be profitable in the future.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Nutriband in this interactive graph of future profit estimates.

A Different Perspective

We're pleased to report that Nutriband shareholders have received a total shareholder return of 58% over one year. Notably the five-year annualised TSR loss of 0.4% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. It's always interesting to track share price performance over the longer term. But to understand Nutriband better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Nutriband (at least 1 which is significant) , and understanding them should be part of your investment process.

Of course Nutriband 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 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.