Investors in Crinetics Pharmaceuticals (NASDAQ:CRNX) have seen solid returns of 196% over the past three years

It might seem bad, but the worst that can happen when you buy a stock (without leverage) is that its share price goes to zero. But if you buy shares in a really great company, you can more than double your money. To wit, the Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) share price has flown 196% in the last three years. Most would be happy with that. On top of that, the share price is up 22% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

See our latest analysis for Crinetics Pharmaceuticals

Crinetics Pharmaceuticals recorded just US$1,974,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that Crinetics Pharmaceuticals 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. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Crinetics Pharmaceuticals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

When it last reported its balance sheet in March 2024, Crinetics Pharmaceuticals could boast a strong position, with cash in excess of all liabilities of US$798m. This gives management the flexibility to drive business growth, without worrying too much about cash reserves. And with the share price up 74% per year, over 3 years , the market is focussed on that blue sky potential. The image below shows how Crinetics Pharmaceuticals' balance sheet has changed over time; if you want to see the precise values, simply click on the image.

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. You can click here to see if there are insiders buying.

A Different Perspective

It's nice to see that Crinetics Pharmaceuticals shareholders have received a total shareholder return of 116% over the last year. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Crinetics Pharmaceuticals better, we need to consider many other factors. For instance, we've identified 3 warning signs for Crinetics Pharmaceuticals that you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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.