Advertisement
Canada markets open in 6 hours 45 minutes
  • S&P/TSX

    22,265.05
    -108.35 (-0.48%)
     
  • S&P 500

    5,306.04
    +1.32 (+0.02%)
     
  • DOW

    38,852.86
    -216.74 (-0.55%)
     
  • CAD/USD

    0.7323
    -0.0014 (-0.19%)
     
  • CRUDE OIL

    80.16
    +0.33 (+0.41%)
     
  • Bitcoin CAD

    93,538.21
    +827.48 (+0.89%)
     
  • CMC Crypto 200

    1,450.45
    -34.24 (-2.31%)
     
  • GOLD FUTURES

    2,353.20
    -3.30 (-0.14%)
     
  • RUSSELL 2000

    2,066.85
    -2.82 (-0.14%)
     
  • 10-Yr Bond

    4.5420
    +0.0750 (+1.68%)
     
  • NASDAQ futures

    18,872.75
    -67.75 (-0.36%)
     
  • VOLATILITY

    12.92
    +0.56 (+4.53%)
     
  • FTSE

    8,254.18
    -63.41 (-0.76%)
     
  • NIKKEI 225

    38,556.87
    -298.50 (-0.77%)
     
  • CAD/EUR

    0.6745
    -0.0007 (-0.10%)
     

Strong week for Vir Biotechnology (NASDAQ:VIR) shareholders doesn't alleviate pain of three-year loss

For many investors, the main point of stock picking is to generate higher returns than the overall market. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Vir Biotechnology, Inc. (NASDAQ:VIR) shareholders have had that experience, with the share price dropping 35% in three years, versus a market return of about 91%. But it's up 5.4% in the last week.

While the last three years has been tough for Vir Biotechnology shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

View our latest analysis for Vir Biotechnology

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

ADVERTISEMENT

Vir Biotechnology became profitable within the last five years. We would usually expect to see the share price rise as a result. So it's worth looking at other metrics to try to understand the share price move.

Revenue is actually up 107% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Vir Biotechnology more closely, as sometimes stocks fall unfairly. This could present an opportunity.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
earnings-and-revenue-growth

We know that Vir Biotechnology has improved its bottom line over the last three years, but what does the future have in store? You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

We can sympathize with Vir Biotechnology about their 6.2% loss for the year, but the silver lining is that the broader market return was worse, at around -11%. The one-year return is also not as bad as the 11% per annum loss investors have suffered over the last three years. It could well be that the business has begun to stabilize, though the recent returns are hardly impressive. It's always interesting to track share price performance over the longer term. But to understand Vir Biotechnology better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Vir Biotechnology (of which 1 is concerning!) you should know about.

We will like Vir Biotechnology better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here