This month we saw the FibroGen, Inc. (NASDAQ:FGEN) up an impressive 32%. But spare a thought for long-term holders, who have held the stock as it has fallen in value for the past five years. Like a sinking ship, the stock price fell 71% during this period. So we are not gaining too much confidence with the recent recovery. The important question is whether the company itself justifies a higher share price in the long term.
Although last week was more reassuring for shareholders, they are still in the red over the past five years, so let’s see if the underlying activity is responsible for the decline.
See our latest analysis for FibroGen
Since FibroGen has not made a profit in the past twelve months, we will focus on revenue growth to get a quick overview of its business development. When a business is not making a profit, you generally expect to see good revenue growth. Some companies are willing to defer profitability to increase revenue faster, but in this case, good revenue growth is expected.
In five years, FibroGen has increased its turnover by 9.9% per year. That’s a pretty good rate for a long period of time. Thus, the fall in stock prices of 11% per year seems quite steep. The market can be a harsh master when your business is losing money and revenue growth disappoints.
You can see how earnings and income have changed over time below (find out the exact values by clicking on the image).
Balance sheet strength is critical. It might be interesting to take a look at our free report on the evolution of its financial situation over time.
A different perspective
It is good to see that FibroGen has rewarded shareholders with a total shareholder return of 44% over the past twelve months. Notably, the five-year annualized TSR loss of 11% per year compares very unfavorably to recent share price performance. We generally value long-term performance more than short-term performance, but the recent improvement could point to a (positive) inflection point within the company. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we have identified 1 warning sign for FibroGen of which you should be aware.
But note: FibroGen may not be the best stock to buy. So take a look at this free list of interesting companies with past earnings growth (and new growth forecasts).
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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