Yahoo Finance Cara Therapeutics (NASDAQ:CARA shareholders incur further losses as stock declines 8.8% this week, taking three-year losses to 35%
For many investors, the main point of stock picking is to generate higher returns than the overall market. 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 Cara Therapeutics, Inc. (NASDAQ:CARA) shareholders, since the share price is down 35% in the last three years, falling well short of the market return of around 20%. On top of that, the share price is down 8.8% in the last week.
With the stock having lost 8.8% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
View our latest analysis for Cara Therapeutics
Because Cara Therapeutics made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Over three years, Cara Therapeutics grew revenue at 17% per year. That's a pretty good rate of top-line growth. Shareholders have seen the share price fall at 10% per year, for three years. So the market has definitely lost some love for the stock. With revenue growing at a solid clip, now might be the time to focus on the possibility that it will have a brighter future.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
Although it hurts that Cara Therapeutics returned a loss of 18% in the last twelve months, the broader market was actually worse, returning a loss of 24%. Unfortunately, last year's performance may indicate unresolved challenges, given that it's worse than the annualised loss of 4% over the last half decade. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. Before spending more time on Cara Therapeutics it might be wise to click here to see if insiders have been buying or selling shares.
Of course Cara Therapeutics may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
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