It hasn't been the best quarter for Avid Bioservices, Inc. (NASDAQ:CDMO) shareholders, since the share price has fallen 21% in that time. But that does not change the realty that the stock's performance has been terrific, over five years. In that time, the share price has soared some 927% higher! Arguably, the recent fall is to be expected after such a strong rise. Of course what matters most is whether the business can improve itself sustainably, thus justifying a higher price. Anyone who held for that rewarding ride would probably be keen to talk about it.
While this past week has detracted from the company's five-year return, let's look at the recent trends of the underlying business and see if the gains have been in alignment.
While Avid Bioservices made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last 5 years Avid Bioservices saw its revenue grow at 11% per year. That's a pretty good long term growth rate. Arguably it's more than reflected in the very strong share price gain of 59% a year over a half a decade. We usually like strong growth stocks but it does seem the market already appreciates this one quite well!
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Avid Bioservices in this interactive graph of future profit estimates.
A Different Perspective
It's good to see that Avid Bioservices has rewarded shareholders with a total shareholder return of 55% in the last twelve months. However, that falls short of the 59% TSR per annum it has made for shareholders, each year, over five years. It's always interesting to track share price performance over the longer term. But to understand Avid Bioservices better, we need to consider many other factors. Even so, be aware that Avid Bioservices is showing 1 warning sign in our investment analysis , you should know about...
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
