Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

It's been a soft week for Pharmacolog i Uppsala AB (publ) (STO:PHLOG B) shares, which are down 10%. Despite this, the stock is a strong performer over the last year, no doubt about that. Indeed, the share price is up an impressive 112% in that time. So it may be that the share price is simply cooling off after a strong rise. Only time will tell if there is still too much optimism currently reflected in the share price.

Check out our latest analysis for Pharmacolog i Uppsala

Pharmacolog i Uppsala recorded just kr1,277,532 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). Investors will be hoping that Pharmacolog i Uppsala can make progress and gain better traction for the business, before it runs low on cash.

We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Pharmacolog i Uppsala investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.

Pharmacolog i Uppsala had cash in excess of all liabilities of just kr5.8m when it last reported (March 2019). So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. Given how low on cash the it got, investors must really like its potential for the share price to be up 112% in the last year. You can click on the image below to see (in greater detail) how Pharmacolog i Uppsala's cash levels have changed over time.

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. 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. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Pharmacolog i Uppsala's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Pharmacolog i Uppsala hasn't been paying dividends, but its TSR of 129% exceeds its share price return of 112%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

It's nice to see that Pharmacolog i Uppsala shareholders have gained 129% (in total) over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 18%. The improving returns to shareholders suggests the stock is becoming more popular with time. You could get a better understanding of Pharmacolog i Uppsala's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

But note: Pharmacolog i Uppsala 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 SE 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.