Investors in Vanda Pharmaceuticals (NASDAQ:VNDA) have made a decent return of 66% over the past year
Passive investing in index funds can generate returns that roughly match the overall market. But investors can boost returns by picking market-beating companies to own shares in. For example, the Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) share price is up 66% in the last 1 year, clearly besting the market return of around 27% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Zooming out, the stock is actually down 19% in the last three years.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
See our latest analysis for Vanda Pharmaceuticals
There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year, Vanda Pharmaceuticals actually saw its earnings per share drop 72%.
This means it's unlikely the market is judging the company based on earnings growth. Therefore, it seems likely that investors are putting more weight on metrics other than EPS, at the moment.
However the year on year revenue growth of 7.4% would help. We do see some companies suppress earnings in order to accelerate revenue growth.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We know that Vanda Pharmaceuticals has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Vanda Pharmaceuticals stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Vanda Pharmaceuticals has rewarded shareholders with a total shareholder return of 66% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 3% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Vanda Pharmaceuticals better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Vanda Pharmaceuticals you should be aware of.
Of course Vanda Pharmaceuticals may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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. 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.
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