Investors in SQZ Biotechnologies (NYSE:SQZ) from a year ago are still down 68%, even after 19% gain this past week

By
Simply Wall St
Published
March 22, 2022
NYSE:SQZ
Source: Shutterstock

This week we saw the SQZ Biotechnologies Company (NYSE:SQZ) share price climb by 19%. But that isn't much consolation to those who have suffered through the declines of the last year. Like an arid lake in a warming world, shareholder value has evaporated, with the share price down 68% in that time. The share price recovery is not so impressive when you consider the fall. It may be that the fall was an overreaction.

Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.

View our latest analysis for SQZ Biotechnologies

Given that SQZ Biotechnologies 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year SQZ Biotechnologies saw its revenue grow by 29%. That's definitely a respectable growth rate. Unfortunately it seems investors wanted more, because the share price is down 68% in that time. It may well be that the business remains approximately on track, but its revenue growth has simply been delayed. To our minds it isn't enough to just look at revenue, anyway. Always consider when profits will flow.

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
NYSE:SQZ Earnings and Revenue Growth March 22nd 2022

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While SQZ Biotechnologies shareholders are down 68% for the year, the market itself is up 5.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 49% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. 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. Even so, be aware that SQZ Biotechnologies is showing 2 warning signs in our investment analysis , you should know about...

Of course SQZ Biotechnologies 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 US exchanges.

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