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If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Arcus Biosciences, Inc. (NYSE:RCUS) shareholders know that all too well, since the share price is down considerably over three years. Unfortunately, they have held through a 65% decline in the share price in that time. And the share price decline continued over the last week, dropping some 9.9%.
After losing 9.9% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.
View our latest analysis for Arcus Biosciences
Arcus Biosciences 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 desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years, Arcus Biosciences' revenue dropped 14% per year. That is not a good result. The share price decline of 18% compound, over three years, is understandable given the company doesn't have profits to boast of, and revenue is moving in the wrong direction. Having said that, if growth is coming in the future, now may be the low ebb for the company. We don't generally like to own companies that lose money and can't grow revenues. But any company is worth looking at when it makes a maiden profit.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Arcus Biosciences is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for Arcus Biosciences in this interactive graph of future profit estimates.
A Different Perspective
Investors in Arcus Biosciences had a tough year, with a total loss of 12%, 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 7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Arcus Biosciences better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Arcus Biosciences you should know about.