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Even the best stock pickers will make plenty of bad investments. Anyone who held Blueprint Medicines Corporation (NASDAQ:BPMC) over the last year knows what a loser feels like. The share price has slid 59% in that time. To make matters worse, the returns over three years have also been really disappointing (the share price is 46% lower than three years ago). Shareholders have had an even rougher run lately, with the share price down 34% in the last 90 days.
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 Blueprint Medicines
Blueprint Medicines isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.
In the last twelve months, Blueprint Medicines increased its revenue by 154%. That's well above most other pre-profit companies. Meanwhile, the share price slid 59%. Typically a growth stock like this will be volatile, with some shareholders concerned about the red ink on the bottom line (that is, the losses). Generally speaking investors would consider a stock like this less risky once it turns a profit. But when do you think that will happen?
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Blueprint Medicines
A Different Perspective
While the broader market lost about 22% in the twelve months, Blueprint Medicines shareholders did even worse, losing 59%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. 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. Take risks, for example - Blueprint Medicines has 2 warning signs we think you should be aware of.