It’s easy to match the overall market return by buying an index fund. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) shareholders over the last year, as the share price declined 25%. That’s well below the market return of 23%. At least the damage isn’t so bad if you look at the last three years, since the stock is down 20% in that time. Shareholders have had an even rougher run lately, with the share price down 25% in the last 90 days.
Check out our latest analysis for Ionis Pharmaceuticals
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
Unfortunately Ionis Pharmaceuticals reported an EPS drop of 68% for the last year. The share price fall of 25% isn’t as bad as the reduction in earnings per share. So despite the weak per-share profits, some investors are probably relieved the situation wasn’t more difficult. Indeed, with a P/E ratio of 50.08 there is obviously some real optimism that earnings will bounce back.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We know that Ionis Pharmaceuticals has improved its bottom line over the last three years, but what does the future have in store? It might be well worthwhile taking a look at our free report on how its financial position has changed over time.