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As every investor would know, not every swing hits the sweet spot. But you have a problem if you face massive losses more than once in a while. So consider, for a moment, the misfortune of Sutro Biopharma, Inc. (NASDAQ:STRO) investors who have held the stock for three years as it declined a whopping 80%. That would be a disturbing experience. We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.
Now let's have a look at the company's fundamentals, and see if the long term shareholder return has matched the performance of the underlying business.
View our latest analysis for Sutro Biopharma
Sutro Biopharma 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 desire strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years, Sutro Biopharma saw its revenue grow by 38% per year, compound. That's well above most other pre-profit companies. So why has the share priced crashed 22% per year, in the same time? You'd want to take a close look at the balance sheet, as well as the losses. Sometimes fast revenue growth doesn't lead to profits. Unless the balance sheet is strong, the company might have to raise capital.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
Sutro Biopharma 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 Sutro Biopharma in this interactive graph of future profit estimates.
A Different Perspective
Sutro Biopharma provided a TSR of 17% over the last twelve months. But that was short of the market average. But at least that's still a gain! Over five years the TSR has been a reduction of 10% per year, over five years. It could well be that the business is stabilizing. It's always interesting to track share price performance over the longer term. But to understand Sutro Biopharma better, we need to consider many other factors. For example, we've discovered 3 warning signs for Sutro Biopharma that you should be aware of before investing here.
Of course Sutro Biopharma may not be the best stock to buy. So you may wish to see this free collection of growth stocks.