Yahoo Finance Can You Imagine How XOMA's (NASDAQ:XOMA) Shareholders Feel About The 12% Share Price Increase?
On average, over time, stock markets tend to rise higher. This makes investing attractive. But if you choose that path, you're going to buy some stocks that fall short of the market. For example, the XOMA Corporation (NASDAQ:XOMA), share price is up over the last year, but its gain of 12% trails the market return. However, the stock hasn't done so well in the longer term, with the stock only up 6.6% in three years.
Check out our latest analysis for XOMA
We don't think XOMA's revenue of US$2,226,000 is enough to establish significant demand. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that XOMA comes up with a great new product, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that the company needed to issue more shares recently so that it could raise enough money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.
Our data indicates that XOMA had more in total liabilities than it had cash, when it last reported. That put it in the highest risk category, according to our analysis. So we're not surprised to see the stock up 157% in the last year , once the company took on some more capital. It's clear more than a few people believe in the potential. You can see in the image below, how XOMA's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
XOMA shareholders are up 12% for the year. 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 0.3% 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 XOMA better, we need to consider many other factors. For instance, we've identified 3 warning signs for XOMA that you should be aware of.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. 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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