Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

The simplest way to benefit from a rising market is to buy an index fund. But if you buy individual stocks, you can do both better or worse than that. That downside risk was realized by Silly Monks Entertainment Limited (NSE:SILLYMONKS) shareholders over the last year, as the share price declined 31%. That falls noticeably short of the market return of around 5.8%. We wouldn't rush to judgement on Silly Monks Entertainment because we don't have a long term history to look at. It's up 6.5% in the last seven days.

View our latest analysis for Silly Monks Entertainment

We don't think that Silly Monks Entertainment's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

In the last twelve months, Silly Monks Entertainment increased its revenue by 35%. We think that is pretty nice growth. Unfortunately that wasn't good enough to stop the share price dropping 31%. This implies the market was expecting better growth. However, that's in the past now, and it's the future that matters most.

Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.

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

A Different Perspective

While Silly Monks Entertainment shareholders are down 31% for the year, the market itself is up 5.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. With the stock down 5.0% over the last three months, the market doesn't seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we'd remain pretty wary until we see some strong business performance. If you would like to research Silly Monks Entertainment in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.