Deciphera Pharmaceuticals (NASDAQ:DCPH) adds US$249m to market cap in the past 7 days, though investors from three years ago are still down 53%

·3 min read

It is doubtless a positive to see that the Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) share price has gained some 80% in the last three months. But that is small recompense for the exasperating returns over three years. Tragically, the share price declined 53% in that time. So the improvement may be a real relief to some. While many would remain nervous, there could be further gains if the business can put its best foot forward.

While the last three years has been tough for Deciphera Pharmaceuticals shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

Check out our latest analysis for Deciphera Pharmaceuticals

Deciphera Pharmaceuticals isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Deciphera Pharmaceuticals saw its revenue grow by 62% per year, compound. That's well above most other pre-profit companies. In contrast, the share price is down 15% compound, over three years - disappointing by most standards. This could mean hype has come out of the stock because the losses are concerning investors. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

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
earnings-and-revenue-growth

This free interactive report on Deciphera Pharmaceuticals' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Deciphera Pharmaceuticals shareholders are down 43% for the year, falling short of the market return. Meanwhile, the broader market slid about 12%, likely weighing on the stock. The three-year loss of 15% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 3 warning signs for Deciphera Pharmaceuticals you should be aware of.

We will like Deciphera Pharmaceuticals better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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

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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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