Yahoo Finance Oxford Nanopore Technologies (LON:ONT) shareholders are up 8.5% this past week, but still in the red over the last year
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. Investors in Oxford Nanopore Technologies plc (LON:ONT) have tasted that bitter downside in the last year, as the share price dropped 44%. That falls noticeably short of the market decline of around 0.7%. We wouldn't rush to judgement on Oxford Nanopore Technologies because we don't have a long term history to look at. Shareholders have had an even rougher run lately, with the share price down 16% in the last 90 days. We note that the company has reported results fairly recently; and the market is hardly delighted. You can check out the latest numbers in our company report.
On a more encouraging note the company has added UK£139m to its market cap in just the last 7 days, so let's see if we can determine what's driven the one-year loss for shareholders.
View our latest analysis for Oxford Nanopore Technologies
Oxford Nanopore Technologies wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last year Oxford Nanopore Technologies saw its revenue grow by 49%. That's a strong result which is better than most other loss making companies. Given the revenue growth, the share price drop of 44% seems quite harsh. Our sympathies to shareholders who are now underwater. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our monkey brains haven't evolved to think exponentially, so humans do tend to underestimate companies that have exponential growth.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. 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 Oxford Nanopore Technologies in this interactive graph of future profit estimates.
A Different Perspective
We doubt Oxford Nanopore Technologies shareholders are happy with the loss of 44% over twelve months. That falls short of the market, which lost 0.7%. That's disappointing, but it's worth keeping in mind that the market-wide selling wouldn't have helped. With the stock down 16% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Take risks, for example - Oxford Nanopore Technologies has 2 warning signs we think you should be aware of.
Oxford Nanopore Technologies is not the only stock that insiders are buying. 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 British 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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