Frequency Therapeutics, Inc. (NASDAQ:FREQ) shareholders will doubtless be very grateful to see the share price up 41% in the last week. But that hardly compensates for the shocking decline over the last twelve months. During that time the share price has plummeted like a stone, down 86%. It's not uncommon to see a bounce after a drop like that. The bigger issue is whether the company can sustain the momentum in the long term. While a drop like that is definitely a body blow, money isn't as important as health and happiness.
The recent uptick of 41% could be a positive sign of things to come, so let's take a lot at historical fundamentals.
Frequency Therapeutics 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In just one year Frequency Therapeutics saw its revenue fall by 73%. If you think that's a particularly bad result, you're statistically on the money If you need more proof of that, check the share price. (Hint: it tanked 86%). Our mindset doesn't have a lot of time for stocks like this. While some losers redeem themselves, most remain losers and we prefer winners anyway.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Frequency Therapeutics' balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Frequency Therapeutics shareholders are down 86% for the year, even worse than the market loss of 19%. There's no doubt that's a disappointment, but the stock may well have fared better in a stronger market. The share price decline has continued throughout the most recent three months, down 33%, suggesting an absence of enthusiasm from investors. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. It's always interesting to track share price performance over the longer term. But to understand Frequency Therapeutics better, we need to consider many other factors. For instance, we've identified 4 warning signs for Frequency Therapeutics that you should be aware of.
But note: Frequency Therapeutics 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 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.