This month, we saw the ZOO Digital Group plc (LON:ZOO) up an impressive 65%. But that isn't much consolation to those who have suffered through the declines of the last year. During that time the share price has sank like a stone, descending 62%. It's not that amazing to see a bounce after a drop like that. Of course, it could be that the fall was overdone.

Although the past week has been more reassuring for shareholders, they're still in the red over the last year, so let's see if the underlying business has been responsible for the decline.

View our latest analysis for ZOO Digital Group

ZOO Digital Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

ZOO Digital Group's revenue didn't grow at all in the last year. In fact, it fell 37%. That looks pretty grim, at a glance. The share price drop of 62% is understandable given the company doesn't have profits to boast of. Fingers crossed this is the low ebb for the stock. We have a natural aversion to companies that are losing money and shrinking revenue. But perhaps that is being too careful.

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

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

ZOO Digital Group shareholders are down 62% for the year, but the market itself is up 9.9%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 ZOO Digital Group is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...