It hasn't been the best quarter for Genix Pharmaceuticals Corporation (CVE:GENX) shareholders, since the share price has fallen 24% in that time. But that doesn't change the fact that the returns over the last five years have been very strong. Indeed, the share price is up an impressive 117% in that time. We think it's more important to dwell on the long term returns than the short term returns. The more important question is whether the stock is too cheap or too expensive today.

View our latest analysis for Genix Pharmaceuticals

With just CA$243,587 worth of revenue in twelve months, we don't think the market considers Genix Pharmaceuticals to have proven its business plan. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that Genix Pharmaceuticals can make progress and gain better traction for the business, before it runs low on cash.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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). Genix Pharmaceuticals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Genix Pharmaceuticals had liabilities exceeding cash by CA$115k when it last reported in July 2019, according to our data. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 94% per year, over 5 years , but we're happy for holders. Investors must really like its potential. The image below shows how Genix Pharmaceuticals's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can see in the image below, how Genix Pharmaceuticals's cash levels have changed over time (click to see the values).

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Given that situation, many of the best investors like to check if insiders have been buying shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

We're pleased to report that Genix Pharmaceuticals shareholders have received a total shareholder return of 18% over one year. That gain is better than the annual TSR over five years, which is 17%. 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. You could get a better understanding of Genix Pharmaceuticals's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.