Relay Therapeutics (NASDAQ:RLAY shareholders incur further losses as stock declines 9.4% this week, taking one-year losses to 13%

By
Simply Wall St
Published
April 19, 2022
NasdaqGM:RLAY
Source: Shutterstock

While not a mind-blowing move, it is good to see that the Relay Therapeutics, Inc. (NASDAQ:RLAY) share price has gained 20% in the last three months. But in truth the last year hasn't been good for the share price. After all, the share price is down 13% in the last year, significantly under-performing the market.

With the stock having lost 9.4% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Relay Therapeutics

Relay Therapeutics 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In just one year Relay Therapeutics saw its revenue fall by 96%. That looks like a train-wreck result to investors far and wide. No surprise, then, that the share price fell 13% over the year. We would want to see improvements in the core business, and diminishing losses, before getting too excited about this one.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NasdaqGM:RLAY Earnings and Revenue Growth April 19th 2022

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

We doubt Relay Therapeutics shareholders are happy with the loss of 13% over twelve months. That falls short of the market, which lost 0.6%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. Putting aside the last twelve months, it's good to see the share price has rebounded by 20%, in the last ninety days. Let's just hope this isn't the widely-feared 'dead cat bounce' (which would indicate further declines to come). 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. Case in point: We've spotted 5 warning signs for Relay Therapeutics you should be aware of, and 1 of them is significant.

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 US exchanges.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.