In This Article:
As an investor, mistakes are inevitable. But you have a problem if you face massive losses more than once in a while. So spare a thought for the long term shareholders of Bicycle Therapeutics plc (NASDAQ:BCYC); the share price is down a whopping 74% in the last three years. That'd be enough to cause even the strongest minds some disquiet. And over the last year the share price fell 25%, so we doubt many shareholders are delighted. Furthermore, it's down 45% in about a quarter. That's not much fun for holders.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
View our latest analysis for Bicycle Therapeutics
Given that Bicycle Therapeutics 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. 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.
Over three years, Bicycle Therapeutics grew revenue at 45% per year. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 20% a year in the same time period. The share price makes us wonder if there is an issue with profitability. Sometimes fast revenue growth doesn't lead to profits. Unless the balance sheet is strong, the company might have to raise capital.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Bicycle Therapeutics is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Bicycle Therapeutics stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Investors in Bicycle Therapeutics had a tough year, with a total loss of 25%, against a market gain of about 24%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 0.7% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Take risks, for example - Bicycle Therapeutics has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.