What Type Of Returns Would Sol-Gel Technologies'(NASDAQ:SLGL) Shareholders Have Earned If They Purchased Their SharesYear Ago?

It is doubtless a positive to see that the Sol-Gel Technologies Ltd. (NASDAQ:SLGL) share price has gained some 33% in the last three months. But in truth the last year hasn't been good for the share price. In fact the stock is down 34% in the last year, well below the market return.

View our latest analysis for Sol-Gel Technologies

Sol-Gel Technologies 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Sol-Gel Technologies' revenue didn't grow at all in the last year. In fact, it fell 43%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 34% in that time. What would you expect when revenue is falling, and it doesn't make a profit? It's hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.

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

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. So it makes a lot of sense to check out what analysts think Sol-Gel Technologies will earn in the future (free profit forecasts).

A Different Perspective

Given that the market gained 24% in the last year, Sol-Gel Technologies shareholders might be miffed that they lost 34%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. It's great to see a nice little 33% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. 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. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Sol-Gel Technologies you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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