If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. Long term Xencor, Inc. (NASDAQ:XNCR) shareholders know that all too well, since the share price is down considerably over three years. Regrettably, they have had to cope with a 65% drop in the share price over that period. And more recent buyers are having a tough time too, with a drop of 49% in the last year. Even worse, it's down 9.0% in about a month, which isn't fun at all.
Since Xencor has shed US$107m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
Because Xencor 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.
In the last three years, Xencor saw its revenue grow by 5.5% per year, compound. Given it's losing money in pursuit of growth, we are not really impressed with that. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 18% during the period. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn't easy, and the process will not always be smooth.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
This free interactive report on Xencor's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Investors in Xencor had a tough year, with a total loss of 49%, against a market gain of about 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand Xencor better, we need to consider many other factors. Even so, be aware that Xencor is showing 1 warning sign in our investment analysis , you should know about...
But note: Xencor may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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.