It’s nice to see the Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) stock price up 14% in one week. But spare a thought for long-term holders, who have held the stock as it has fallen in value for the past five years. Like a sinking ship, the stock price fell 88% during this period. It’s true that the recent rebound could signal that the company is turning over a new leaf, but we’re not so sure. The important question is whether the company itself justifies a higher share price in the long term. We really hope that anyone weathering this price drop has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.
While the past five years have been difficult for Marinus Pharmaceuticals shareholders, the past week has shown promising signs. So let’s take a look at the longer-term fundamentals and see if they were the driver of the negative returns.
Check out our latest analysis for Marinus Pharmaceuticals
Since Marinus Pharmaceuticals has not made a profit in the past twelve months, we will focus on revenue growth to get a quick overview of its business development. Generally speaking, companies without profits should increase their revenue every year, and at a good pace. Indeed, it is difficult to be sure that a business will be sustainable if revenue growth is negligible and it never makes a profit.
Over the past five years, Marinus Pharmaceuticals has seen its revenue increase by 85% per year. That’s way above most other nonprofits. So on the face of it, we’re really surprised to see that the stock price has fallen by an average of 13% every year over the same period. It could be that the stock has been over hyped before. While there may be an opportunity here, you would want to take a close look at the strength of the balance sheet.
The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).
Marinus Pharmaceuticals is a well-known stock, with extensive analyst coverage, which suggests some visibility on future growth. So it makes a lot of sense to check out what analysts think Marinus Pharmaceuticals will earn in the future (free analyst consensus estimates)
A different perspective
While the broader market lost around 22% in the twelve months, Marinus Pharmaceuticals shareholders fared even worse, losing 66%. That said, it is inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Unfortunately, last year’s performance capped a bad run, with shareholders facing a total loss of 13% per year over five years. Generally speaking, long-term stock price weakness can be a bad sign, although contrarian investors may want to seek out the stock in hopes of a turnaround. It is always interesting to follow the evolution of the share price over the long term. But to better understand Marinus Pharmaceuticals, we need to consider many other factors. To this end, you should be aware of the 2 warning signs we spotted with Marinus Pharmaceuticals.
Sure Marinus Pharmaceuticals may not be the best stock to buy. So you might want to see this free collection of growth values.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
Valuation is complex, but we help make it simple.
Find out if Marinus Pharmaceuticals is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.
See the free analysis
Feedback on this article? Concerned about content? Enter into a contract with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.