Unless you borrow money to invest, the potential losses are limited. But if you pick the right business to buy shares in, you can make more than you can lose. Take, for example Ardelyx, Inc. (NASDAQ:ARDX). Its share price is already up an impressive 109% in the last twelve months. It's also good to see the share price up 23% over the last quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Zooming out, the stock is actually down 27% in the last three years.
Since the stock has added US$132m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Ardelyx
Given that Ardelyx 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Ardelyx saw its revenue grow by 1,390%. That's a head and shoulders above most loss-making companies. And the share price has responded, gaining 109% as we previously mentioned. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Ardelyx in this interactive graph of future profit estimates.
A Different Perspective
We're pleased to report that Ardelyx shareholders have received a total shareholder return of 109% over one year. That gain is better than the annual TSR over five years, which is 9%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. To that end, you should be aware of the 3 warning signs we've spotted with Ardelyx .
Of course Ardelyx 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 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.