NOVONIX Limited (ASX:NVX) shareholders should be happy to see the share price up 13% in the last week. But the last three years have seen a terrible decline. In that time the share price has melted like a snowball in the desert, down 70%. So it sure is nice to see a bit of an improvement. But the more important question is whether the underlying business can justify a higher price still.

The recent uptick of 13% could be a positive sign of things to come, so let's take a look at historical fundamentals.

See our latest analysis for NOVONIX

Given that NOVONIX didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over three years, NOVONIX grew revenue at 28% per year. That's well above most other pre-profit companies. So why has the share priced crashed 19% per year, in the same time? You'd want to take a close look at the balance sheet, as well as the losses. Ultimately, revenue growth doesn't amount to much if the business can't scale well. Unless the balance sheet is strong, the company might have to raise capital.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. If you are thinking of buying or selling NOVONIX stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

While the broader market gained around 13% in the last year, NOVONIX shareholders lost 28%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 3% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. 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. Even so, be aware that NOVONIX is showing 3 warning signs in our investment analysis , and 2 of those are significant...

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