Arvinas (NASDAQ:ARVN) pops 11% this week, taking one-year gains to 81%

Simply Wall St · 10/17 14:16

If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the Arvinas, Inc. (NASDAQ:ARVN) share price is up 81% in the last 1 year, clearly besting the market return of around 35% (not including dividends). So that should have shareholders smiling. In contrast, the longer term returns are negative, since the share price is 67% lower than it was three years ago.

The past week has proven to be lucrative for Arvinas investors, so let's see if fundamentals drove the company's one-year performance.

Check out our latest analysis for Arvinas

Given that Arvinas didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last year Arvinas saw its revenue shrink by 41%. The stock is up 81% in that time, a fine performance given the revenue drop. To us that means that there isn't a lot of correlation between the past revenue performance and the share price, but a closer look at analyst forecasts and the bottom line may well explain a lot.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NasdaqGS:ARVN Earnings and Revenue Growth October 17th 2024

Arvinas is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Arvinas in this interactive graph of future profit estimates.

A Different Perspective

It's good to see that Arvinas has rewarded shareholders with a total shareholder return of 81% in the last twelve months. That's better than the annualised return of 8% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Arvinas better, we need to consider many other factors. For instance, we've identified 2 warning signs for Arvinas that you should be aware of.

But note: Arvinas 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 American exchanges.