Pliant Therapeutics (NASDAQ:PLRX) investors are sitting on a loss of 69% if they invested a year ago

Even the best stock pickers will make plenty of bad investments. Unfortunately, shareholders of Pliant Therapeutics, Inc. (NASDAQ:PLRX) have suffered share price declines over the last year. The share price is down a hefty 69% in that time. We wouldn't rush to judgement on Pliant Therapeutics because we don't have a long term history to look at. Furthermore, it's down 39% in about a quarter. That's not much fun for holders.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

Check out our latest analysis for Pliant Therapeutics

Pliant Therapeutics wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Pliant Therapeutics' revenue didn't grow at all in the last year. In fact, it fell 89%. That looks like a train-wreck result to investors far and wide. It's no surprise, then, that investors dumped the stock like it was garbage, sending the share price down 69%. Buying shares in loss making companies with falling revenue is often called speculation, not investing. This company will really need to improve on the numbers before we get excited about it.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Take a more thorough look at Pliant Therapeutics' financial health with this free report on its balance sheet.

A Different Perspective

Given that the market gained 5.9% in the last year, Pliant Therapeutics shareholders might be miffed that they lost 69%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. The share price decline has continued throughout the most recent three months, down 39%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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 Pliant Therapeutics you should be aware of, and 1 of them is potentially serious.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.