<!-- HTML_TAG_START -->NasdaqGS:INVA Earnings and Revenue Growth December 25th 2024<!-- HTML_TAG_END -->
If you buy and hold a stock for many years, you’d hope to be making a profit. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Innoviva, Inc. (NASDAQ:INVA) share price is up 26% in the last five years, that’s less than the market return. Zooming in, the stock is up a respectable 9.3% in the last year.
So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.
View our latest analysis for Innoviva
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 imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During five years of share price growth, Innoviva actually saw its EPS drop 23% per year.
Since the EPS are down strongly, it seems highly unlikely market participants are looking at EPS to value the company. Given that EPS is down, but the share price is up, it seems clear the market is focussed on other aspects of the business, at the moment.
We are not particularly impressed by the annual compound revenue growth of 1.8% over five years. So why is the share price up? It’s not immediately obvious to us, but a closer look at the company’s progress over time might yield answers.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So we recommend checking out this free report showing consensus forecasts
Innoviva provided a TSR of 9.3% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that’s still a gain, and it’s actually better than the average return of 5% over half a decade This suggests the company might be improving over time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We’ve spotted 2 warning signs for Innoviva you should be aware of, and 1 of them can’t be ignored.
