Unfortunately, investing is risky - companies can and do go bankrupt. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example Newron Pharmaceuticals S.p.A. (VTX:NWRN). Its share price is already up an impressive 284% in the last twelve months. The last week saw the share price soften some 1.2%. It is also impressive that the stock is up 143% over three years, adding to the sense that it is a real winner.
So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.
See our latest analysis for Newron Pharmaceuticals
Newron 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Newron Pharmaceuticals grew its revenue by 48% last year. That's well above most other pre-profit companies. And the share price has responded, gaining 284% as we previously mentioned. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling Newron Pharmaceuticals stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Newron Pharmaceuticals has rewarded shareholders with a total shareholder return of 284% in the last twelve months. That certainly beats the loss of about 7% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Newron Pharmaceuticals (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.