Investing in Arrowhead Pharmaceuticals (NASDAQ:ARWR) five years ago would have delivered you a 982% gain

Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) shareholders have seen the share price descend 19% over the month. But that does not change the realty that the stock's performance has been terrific, over five years. Indeed, the share price is up a whopping 982% in that time. So we don't think the recent decline in the share price means its story is a sad one. The most important thing for savvy investors to consider is whether the underlying business can justify the share price gain. Unfortunately not all shareholders will have held it for the long term, so spare a thought for those caught in the 43% decline over the last twelve months. It really delights us to see such great share price performance for investors.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Arrowhead Pharmaceuticals

Because Arrowhead Pharmaceuticals 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. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

For the last half decade, Arrowhead Pharmaceuticals can boast revenue growth at a rate of 35% per year. That's well above most pre-profit companies. Arguably, this is well and truly reflected in the strong share price gain of 61%(per year) over the same period. Despite the strong run, top performers like Arrowhead Pharmaceuticals have been known to go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth

Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals in this interactive graph of future profit estimates.

A Different Perspective

We regret to report that Arrowhead Pharmaceuticals shareholders are down 43% for the year. Unfortunately, that's worse than the broader market decline of 19%. 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. Longer term investors wouldn't be so upset, since they would have made 61%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Arrowhead Pharmaceuticals better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Arrowhead Pharmaceuticals , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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