Ascendis Pharma A/S (NASDAQ:ASND) shareholders might be concerned after seeing the share price drop 18% in the last month. Looking on the brighter side, the stock is actually up over twelve months. But to be blunt its return of 35% fall short of what you could have got from an index fund (around 39%).
In light of the stock dropping 3.8% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.
Because Ascendis Pharma made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.
Ascendis Pharma grew its revenue by 167% last year. That's stonking growth even when compared to other loss-making stocks. Let's face it the 35% share price gain in that time is underwhelming compared to the growth. When revenue spikes but the share price doesn't we can't help wondering if the market is missing something. It could be that the stock was previously over-hyped, or that losses are causing concern for the market, but this could be an opportunity.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Ascendis Pharma is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think Ascendis Pharma will earn in the future (free analyst consensus estimates)
A Different Perspective
Ascendis Pharma's TSR for the year was broadly in line with the market average, at 35%. That gain looks pretty satisfying, and it is even better than the five-year TSR of 1.6% per year. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. 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 Ascendis Pharma is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning...
But note: Ascendis Pharma may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
