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As an investor its worth striving to ensure your overall portfolio beats the market average. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. Unfortunately, that's been the case for longer term REGENXBIO Inc. (NASDAQ:RGNX) shareholders, since the share price is down 46% in the last three years, falling well short of the market return of around 34%. And over the last year the share price fell 21%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 18% in the last three months.
On a more encouraging note the company has added US$71m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.
View our latest analysis for REGENXBIO
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, REGENXBIO moved from a loss to profitability. We would usually expect to see the share price rise as a result. So given the share price is down it's worth checking some other metrics too.
Revenue is actually up 76% over the three years, so the share price drop doesn't seem to hinge on revenue, either. It's probably worth investigating REGENXBIO further; while we may be missing something on this analysis, there might also be an opportunity.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It is of course excellent to see how REGENXBIO has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling REGENXBIO stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
We regret to report that REGENXBIO shareholders are down 21% for the year. Unfortunately, that's worse than the broader market decline of 14%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 4% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. If you would like to research REGENXBIO in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.