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The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market But Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) has fallen short of that second goal, with a share price rise of 41% over five years, which is below the market return. The last year hasn't been great either, with the stock up just 4.4%.
View our latest analysis for Agios Pharmaceuticals
Agios Pharmaceuticals wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. 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.
For the last half decade, Agios Pharmaceuticals can boast revenue growth at a rate of 28% per year. Even measured against other revenue-focussed companies, that's a good result. It's nice to see shareholders have made a profit, but the gain of 7% over the period isn't that impressive compared to the overall market. You could argue the market is still pretty skeptical, given the growing revenues. Arguably this falls in a potential sweet spot - modest share price gains but good top line growth over the long term justifies investigation, in our book.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Agios Pharmaceuticals is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.
A Different Perspective
Agios Pharmaceuticals shareholders gained a total return of 4.4% during the year. But that return falls short of the market. If we look back over five years, the returns are even better, coming in at 7% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Agios Pharmaceuticals you should know about.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.