There’s no doubt that investing in the stock market is a truly brilliant way to build wealth. But if you choose that path, you’re going to buy some stocks that fall short of the market. Unfortunately for shareholders, while the Sutro Biopharma, Inc. (NASDAQ:STRO) share price is up 12% in the last year, that falls short of the market return. We’ll need to follow Sutro Biopharma for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.
See our latest analysis for Sutro Biopharma
Given that Sutro Biopharma 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Sutro Biopharma grew its revenue by 116% last year. That’s well above most other pre-profit companies. To be blunt the 12% is underwhelming given the strong revenue growth. It could be that the market is missing what growth investor Matt Joass calls ‘the hidden power of inflection points’. It’s possible that the market is worried about the losses, or simply that the growth was already priced in. Or, this could be worth adding to your watchlist.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at Sutro Biopharma’s financial health with this free report on its balance sheet.
A Different Perspective
We’re happy to report that Sutro Biopharma are up 12% over the year. The bad news is that’s no better than the average market return, which was roughly 28%. However, that falls short of the 27% gain it has made, for shareholders, in the last three months. It’s worth taking note when returns accelerate, as it can indicate positive change in the underlying business, and winners often keep winning. It’s always interesting to track share price performance over the longer term. But to understand Sutro Biopharma better, we need to consider many other factors. Case in point: We’ve spotted 4 warning signs for Sutro Biopharma you should be aware of, and 2 of them can’t be ignored.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can 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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.