Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. To wit, the Sutro Biopharma, Inc. (NASDAQ:STRO) share price is 27% higher than it was a year ago, much better than the market return of around 11% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! We’ll need to follow Sutro Biopharma for a while to get a better sense of its share price trend, since it hasn’t been listed for particularly long.
Sutro Biopharma isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year Sutro Biopharma saw its revenue shrink by 13%. Despite the lack of revenue growth, the stock has returned a solid 27% the last twelve months. To us that means that there isn’t a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on Sutro Biopharma
A Different Perspective
Sutro Biopharma boasts a total shareholder return of 27% for the last year. And the share price momentum remains respectable, with a gain of 55% in the last three months. This suggests the company is continuing to win over new investors. It’s always interesting to track share price performance over the longer term. But to understand Sutro Biopharma better, we need to consider many other factors. To that end, you should learn about the 4 warning signs we’ve spotted with Sutro Biopharma (including 2 which is make us uncomfortable) .
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 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.