It is doubtless a positive to see that the Xencor, Inc. (NASDAQ:XNCR) share price has gained some 41% in the last three months. But that doesn't help the fact that the three year return is less impressive. Truth be told the share price declined 42% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

While the last three years has been tough for Xencor 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 Xencor

Because Xencor 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 hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over the last three years, Xencor's revenue dropped 20% per year. That's definitely a weaker result than most pre-profit companies report. On the face of it we'd posit the share price fall of 12% compound, over three years is well justified by the fundamental deterioration. It would probably be worth asking whether the company can fund itself to profitability. Of course, it is possible for businesses to bounce back from a revenue drop - but we'd want to see that before getting interested.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

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

A Different Perspective

Xencor shareholders gained a total return of 32% during the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 6% endured over half a decade. So this might be a sign the business has turned its fortunes around. It's always interesting to track share price performance over the longer term. But to understand Xencor better, we need to consider many other factors. Even so, be aware that Xencor is showing 2 warning signs in our investment analysis , you should know about...

We will like Xencor better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 American exchanges.

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