Further weakness as Oramed Pharmaceuticals (NASDAQ:ORMP) drops 11% this week, taking one-year losses to 71%

Even the best investor on earth makes unsuccessful investments. But it's not unreasonable to try to avoid truly shocking capital losses. It must have been painful to be a Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) shareholder over the last year, since the stock price plummeted 71% in that time. That'd be a striking reminder about the importance of diversification. However, the longer term returns haven't been so bad, with the stock down 22% in the last three years. Shareholders have had an even rougher run lately, with the share price down 34% in the last 90 days.

If the past week is anything to go by, investor sentiment for Oramed Pharmaceuticals isn't positive, so let's see if there's a mismatch between fundamentals and the share price.

See our latest analysis for Oramed Pharmaceuticals

Oramed 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Oramed Pharmaceuticals' revenue didn't grow at all in the last year. In fact, it fell 0.3%. That looks pretty grim, at a glance. The market obviously agrees, since the share price tanked 71%. That's a stern reminder that profitless companies need to grow the top line, at the very least. But markets do over-react, so there opportunity for investors who are willing to take the time to dig deeper and understand the business.

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

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Oramed Pharmaceuticals shareholders are down 71% for the year, but the market itself is up 12%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 5 warning signs for Oramed Pharmaceuticals (1 is a bit concerning) that you should be aware of.

Oramed Pharmaceuticals is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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.