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Statistically speaking, long term investing is a profitable endeavour. But along the way some stocks are going to perform badly. To wit, the Alkermes plc (NASDAQ:ALKS) share price managed to fall 52% over five long years. That's not a lot of fun for true believers. Furthermore, it's down 16% in about a quarter. That's not much fun for holders.
Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.
See our latest analysis for Alkermes
Alkermes isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
In the last half decade, Alkermes saw its revenue increase by 5.4% per year. That's far from impressive given all the money it is losing. This lacklustre growth has no doubt fueled the loss of 9% per year, in that time. We'd want to see proof that future revenue growth is likely to be significantly stronger before getting too interested in Alkermes. However, it's possible too many in the market will ignore it, and there may be an opportunity if it starts to recover down the track.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Alkermes is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Alkermes in this interactive graph of future profit estimates.
A Different Perspective
The total return of 18% received by Alkermes shareholders over the last year isn't far from the market return of -18%. So last year was actually even worse than the last five years, which cost shareholders 9% per year. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. Before spending more time on Alkermes it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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