Nasdaq-Listed Companies

Alector (NASDAQ:ALEC) shareholders have earned a 134% return over the last year

Some Alector, Inc. (NASDAQ:ALEC) shareholders are probably rather concerned to see the share price fall 33% over the last three months. Despite this, the stock is a strong performer over the last year, no doubt about that. Indeed, the share price is up an impressive 134% in that time. So it is important to view the recent reduction in price through that lense. The real question is whether the business is trending in the right direction.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

Because Alector made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Alector saw its revenue grow by 13%. That's not great considering the company is losing money. So we wouldn't have expected the share price to rise by 134%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.

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

earnings-and-revenue-growthNasdaqGS:ALEC Earnings and Revenue Growth October 4th 2021

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

A Different Perspective

Alector shareholders should be happy with the total gain of 134% over the last twelve months. We regret to report that the share price is down 33% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. 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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Alector (of which 1 is potentially serious!) you should know about.

We will like Alector 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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